Ted Fernandez
About Ted Fernandez
Ted A. Fernandez (age 68) is The Hackett Group’s founder, Chairman, and Chief Executive Officer, serving on the Board since 1997 and leading the company since inception. Prior to Hackett, he spent 18 years at KPMG, culminating as National Managing Partner of Strategic Services and a member of KPMG’s Management Committee (1995–1997) . Under Hackett’s disclosed performance lens, the company’s TSR index rose to 216 in 2024 (from 93 in 2020), adjusted diluted EPS increased to $1.68 in 2024, and 2024 net income was $29.6M . He beneficially owns ~1.72M shares (6.2% of outstanding), and the Board requires the CEO to hold stock worth 6x base salary; he is in compliance .
Performance context (FY 2020–2024):
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| TSR Index (start=100 at 12/31/2019) | 93 | 135 | 137 | 156 | 216 |
| Net Income ($USD thousands) | 5,473 | 41,545 | 40,802 | 34,151 | 29,630 |
| Adjusted Diluted EPS ($) | 0.69 | 1.31 | 1.52 | 1.55 | 1.68 |
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| The Hackett Group, Inc. | Founder; Chairman & CEO | 1997–present | Built consulting and software strategy; direct oversight of long-term value creation |
| KPMG LLP | National Managing Partner, Strategic Services | 1994–1997 | Led strategic consulting; foundation for Hackett’s market entry |
| KPMG LLP | Various executive and client service roles | 1979–1994 | Professional services and leadership experience |
| KPMG LLP | Management Committee Member | 1995–1997 | Firmwide governance and strategy |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| — | — | — | No other public company directorships disclosed for Fernandez in the proxy . |
Fixed Compensation
Multi-year summary (CEO total compensation detail and base salary):
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 750,000 | 750,000 | 900,000 |
| Stock Awards ($) | 2,748,240 | 1,023,570 | 14,019,025 (incl. Stock Price Award) |
| Non-Equity Incentive Plan Compensation ($) | 2,042,100 | 602,100 | 1,014,511 |
| Total ($) | 5,540,340 | 2,375,670 | 15,933,536 |
Notes:
- 2024 stock awards include a one-time Stock Price Award grant with grant date fair value $12,104,914 .
- Hackett provides standard benefits; no executive retirement plans or 401(k) match; perquisites are limited and ≤$10,000 per executive .
Performance Compensation
Annual program design and 2024 outcomes:
| Component | Metric | Target/Goals | Actual/Payout | Vesting |
|---|---|---|---|---|
| Annual Cash Incentive (2024) | Adjusted diluted EPS | Goal: $1.71; Superior: $1.78 | Actual AD EPS: $1.68; cash payout $1,014,511 | N/A (cash) |
| Annual Equity RSUs (2024 plan) | Adjusted diluted EPS | As above; CEO equity opp % salary: Goal 204%, Superior 300% | 60,998 RSUs granted 2/14/2025 (fair value $1,914,111) | 1/3 per year starting 1st anniversary |
| ACV Growth Program (2024) | Annual contract value growth | Commence ≥5%; Goal 15% | Earned between Commence and Goal; CEO RSU fair value $189,443 (3-year vest) | 1/3 per year over 3 years |
| Stock Price Award (one-time, 9/16/2024) | 20-day VWAP hurdles | Hurdles: $30 (33.33%), $40 (33.33%), $50 (33.34%) | CEO grant: 786,885 PSUs; $30 hurdle achieved in 4Q24 | Earned tranche vests no earlier than yr 1/2/3 anniversaries; first third (262,295) vests Sept 2025 |
Additional design details:
- Annual opportunities as % of salary (2024): Cash 0/120%/210% and Equity 0/204%/300% (Commence/Goal/Superior) for CEO; similar scaled targets for COO/CFO .
- 2025 plan retains adjusted diluted EPS as the performance metric; ACV program discontinued for 2025 .
- To offset the one-time Stock Price Awards, annual equity opportunities for NEOs are reduced by 50% during 2025–2028 .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 1,716,561 shares (6.2% of 27,647,034 outstanding as of 3/14/2025) |
| Unvested Equity at FY-end 2024 | 966,615 RSUs unvested (includes 786,885 Stock Price Award units) |
| Earned but time-vesting (SPA) | 262,295 of SPA units tied to $30 hurdle earned and scheduled to vest in Sept 2025 (contingent on service) |
| 2025 Scheduled Vests (est.) | 371,111 units vest in 2025, including 262,295 SPA tranche |
| Stock Ownership Guidelines | CEO must hold stock equal to 6x base salary; CEO is compliant |
| Hedging/Pledging Policy | Hedging prohibited; pledging prohibited without Audit Committee approval |
| Options Outstanding | None; equity primarily RSUs |
Beneficial ownership footnote detail: excludes 131,913 unvested performance RSUs and the 786,885 SPA units (of which 262,295 relate to the $30 hurdle achieved) .
Employment Terms
| Term | Key Provisions |
|---|---|
| Agreement Structure | Employment agreement effective June 2, 1998; amended multiple times; rolling 3-year term with annual auto-renewal |
| Severance (No Cause / Good Reason) | Lump sum of one year’s salary and bonus; full vesting of all outstanding equity |
| Disability | One year’s salary and bonus; full vesting of all outstanding equity |
| Death | Immediate vesting/settlement of all equity grants |
| Change of Control | Upon termination in connection with a CoC: 200% of average total compensation over prior 3 FYs (lump sum) and full vesting of all unvested equity |
| Potential Payouts (12/27/2024 basis) | Good Reason: $15.61M total; Change of Control: $21.52M total (includes equity acceleration values) |
| Clawback | 2024 Compensation Recoupment Policy compliant with SEC/Nasdaq (restatement-based recovery; 3-year lookback) |
| Insider Trading Policy | Adopted and filed as 10-K exhibit; governs trading by insiders |
| Non-Compete/Non-Solicit | Included in employment agreement (durations not specified in proxy) |
| Tax Gross-Ups | None for golden parachute excise taxes |
Board Governance
- Role: Chairman and CEO since founding; Board is 7 members, 5 independent; all three standing committees (Audit, Compensation, Nominating & Corporate Governance) are fully independent .
- Leadership structure: Combined Chair/CEO; no Lead Independent Director. Board cites benefits of unified leadership; oversight via independent committees; Board periodically reviews structure .
- Attendance: In FY2024, Board held 6 meetings; all directors attended ≥75% of Board/committee meetings; independent directors meet in executive session regularly .
- Director compensation: Employee directors receive no additional pay for Board service .
Committee and meeting context (FY2024):
- Audit Committee: 5 meetings; all independent; three audit committee financial experts designated .
- Compensation Committee: defines CEO pay; uses outside advisors; independent composition .
- Nominating & Governance Committee: oversees governance guidelines and director nominations .
Director Compensation (as a director)
- As CEO, Fernandez does not receive separate director compensation .
Compensation Structure Analysis
- Mix shift and one-time award: 2024 CEO stock awards surged to $14.0M (from $1.0M in 2023) driven by a one-time Stock Price Award (786,885 PSUs; $12.1M grant-date value). Annual equity opportunities are reduced by 50% in 2025–2028 to offset this grant .
- Pay-for-performance: Core annual incentives are tied to adjusted diluted EPS with challenging “Goal/Superior” targets; 2024 payout landed between Commence and Goal (AD EPS $1.68 vs Goal $1.71) .
- ACV growth overlay: In 2024, an ACV program provided incremental equity tied to recurring revenue growth; earned between Commence and Goal; discontinued for 2025 .
- New long-term alignment lever: Stock Price Awards require sustained stock price performance ($30/$40/$50 20-day VWAP hurdles) plus time-based vesting through 2028; first hurdle achieved in 4Q24 .
Compensation Committee Analysis and Shareholder Feedback
- Advisors and benchmarking: Historical input from John Bloedorn (ex-Mercer); 2024 review by PayGovernance. Committee emphasizes market awareness but avoids strict benchmarking given unique structure and larger private competitors .
- Say-on-Pay: 2024 shareholder approval ~99% .
- Risk controls: Committee reviews compensation risk; equity plan prohibits option/SAR repricing; clawback policy adopted; hedging prohibited; pledging restricted .
Related Party Transactions
- Company disclosed share repurchases from certain directors and the CFO under approved programs; no related-party transactions disclosed involving Fernandez in 2024–2025 YTD .
Risk Indicators & Red Flags
- Dual role & independence: Combined Chair/CEO with no Lead Independent Director elevates governance risk, mitigated by fully independent committees .
- Late Section 16 filings: One late Form 4 for each NEO reporting the SPA RSUs due to administrative error .
- Equity overhang and vesting supply: Significant unvested RSUs (966,615) and SPA tranches, with 371,111 units scheduled to vest in 2025 including 262,295 SPA units (potential selling pressure) .
- Change-in-control economics: Full equity acceleration and 2x average total compensation severance upon CoC-related termination increase transaction costs (potential deal friction) .
Say-on-Pay & Peer Group Signals
- 2024 Say-on-Pay: ~99% support signals investor acceptance of pay design including the one-time SPA .
- Stock performance graph peer set for TSR comparison: Alithya Group, Huron Consulting Group, Information Services Group .
Investment Implications
- Alignment and ownership: Fernandez’s ~6.2% stake and CEO ownership guideline compliance strongly align incentives with shareholders; hedging is banned and pledging restricted, supporting alignment .
- Performance pay with clear triggers: Core incentives tied to adjusted EPS and long-term SPA price hurdles ($30 achieved; $40/$50 outstanding) create transparent milestones; expect continued focus on profitability and share price durability through 2028 .
- Potential supply and retention: Large SPA tranches with time-based vesting create retention but also possible selling pressure around vest dates (first major vest Sept 2025) .
- Governance trade-off: Combined Chair/CEO without a Lead Independent Director is a governance watchpoint; however, committee independence and high Say-on-Pay support reduce near-term activism risk .
- Transaction dynamics: CoC severance and equity acceleration are meaningful ($21.5M modeled CoC package as of 12/27/2024), potentially impacting M&A negotiations and required premiums .
Appendix: Additional Quantitative Exhibits
A) 2024 Grants of Plan-Based Awards (Fernandez)
| Item | Amount/Units | Date | Notes |
|---|---|---|---|
| Cash Incentive | $1,014,511 | 02/14/2025 | 2024 performance; adjusted EPS program |
| RSU Incentive | 60,998 units; $1,914,111 FV | 02/14/2025 | Vests 1/3 annually |
| Stock Price Award | 786,885 units; $12,104,914 FV | 09/16/2024 | 20-day VWAP hurdles $30/$40/$50; time-vest on anniversaries |
B) Potential Payments (as of 12/27/2024)
| Scenario | Total ($) |
|---|---|
| Good Reason/No Cause | 15,608,409 |
| Change of Control (with termination) | 21,523,653 |
C) Board/Committee Structure Highlights
- Audit Committee: Hamlin (Chair), Harris, Rivero, Wix, Bofill; independent; financial experts designated .
- Compensation Committee: Harris (Chair), Hamlin, Rivero, Wix, Bofill; independent .
- Nominating & Governance: Wix (Chair), Hamlin, Harris, Rivero, Bofill .