Christopher D. Kastner
HUNTINGTON INGALLS INDUSTRIESAbout Christopher D. Kastner
Christopher D. Kastner (age 61) is President and Chief Executive Officer of HII and a member of the Board since March 2022. He previously served as EVP/COO (2021–2022) and EVP/CFO (2016–2021), with prior leadership roles in corporate development and Ingalls Shipbuilding finance, and earlier senior posts at Northrop Grumman’s shipbuilding units . In 2024, HII delivered record consolidated revenues of $11.5B, EPS of $13.96, and free cash flow of $40M, but posted a one‑year TSR of −25.7% amid macro and program cost pressures; $368M was returned to shareholders via dividends and buybacks . CEO pay outcomes reflected performance: 2024 annual incentive paid at 65% of target (OCF miss offset by OM and leadership score), while the 2022–2024 PSU cycle paid at 109% of target, indicating stronger multi‑year execution against EBITDAP/ROIC/relative growth goals .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| HII | President & CEO | 2022–Present | Oversight of shipbuilding and Mission Technologies portfolio; strategic capital deployment, contract awards and execution . |
| HII | EVP & COO | 2021–2022 | Enterprise operations, throughput, and cost initiatives across segments . |
| HII | EVP & CFO | 2016–2021 | Capital allocation, investor relations, and performance management during portfolio expansion . |
| HII | Corp VP & GM, Corporate Development | 2012–2016 | M&A and portfolio shaping, including Mission Technologies evolution . |
| HII/Ingalls Shipbuilding | VP & CFO (Ingalls) | 2011–2012 | Division P&L and controls during post-spin execution . |
| Northrop Grumman Shipbuilding/Ship Systems | Various senior finance, contracts roles | Pre-2011 | Risk management, contracts and Gulf Coast shipbuilding finance leadership . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| New York Life Insurance Co. | Director | Current | Large mutual insurer board experience . |
| Aerospace Industries Association | Member | Current | Industry advocacy and policy . |
| Defense Industry Initiative on Business Ethics & Conduct | Vice Chair | Current | Ethics and compliance leadership across defense industry . |
| Business Roundtable | Board; Chair, Education & Workforce Committee | Current | Workforce development policy leadership . |
Fixed Compensation
| Element (2024) | Amount / Policy |
|---|---|
| Base Salary | $1,300,000 . |
| Target Annual Incentive | 145% of base (raised from 135% in 2023) → $1,885,000 target . |
| Actual AIP Paid | 65% of target = $1,225,250 (CPF 65, IPF 1.0) . |
| Other Compensation | Perquisites and plan matches (see All Other Compensation: $231,738) . |
| Total 2024 Reported Comp | $14,553,665 (includes pension value change) . |
Performance Compensation
Annual Incentive Plan (AIP) – 2024 CEO Formula and Outcome
| Metric | Weight | 0% / 100% / 200% Goal | Result | Points Earned | Contribution to CPF |
|---|---|---|---|---|---|
| Operating Margin (OM) | 45% | 5.60% / 6.61% / 7.03% | 6.62% adj. score | 102 | 46 . |
| Operating Cash Flow (OCF) | 45% | $1,233M / $1,527M / $1,620M | Below threshold | — | 0 . |
| Strategic Leadership (ESG, leadership, cybersecurity, compliance) | 10% | 0 / 100 / 200 | 186 | 186 | 19 . |
| Total Corporate Performance Factor (CPF) | — | — | — | — | 65 . |
| Individual Performance Factor (IPF) | — | — | — | — | 1.0 . |
Notes: Corporate AIP weighted 90% on financial (OM/OCF) and 10% on strategic leadership; CEO IPF fixed at 1.0 in 2024 .
Long‑Term Incentive (LTI) Design and Grants
- Vehicles and Mix: 70% Restricted Performance Stock Rights (RPSRs, PSUs); 30% Restricted Stock Rights (RSRs, time-based) .
- 2024 CEO Target LTI value and grants:
- Target LTI: $6,500,000; Actual grant value: $6,499,823 .
- RPSR grant (2/26/2024): target 15,780 units; max 31,560; metrics: ROIC 40%, EBITDAP 40%, Relative EBITDAP Growth vs S&P A&D Select 20% (3‑yr, 0–200% payout) .
- RSR grant (2/26/2024): 6,763 units; vests ratably over 3 years .
Realized/Realizable Performance
| Cycle | Metrics | Score | Payout |
|---|---|---|---|
| 2022–2024 RPSRs | EBITDAP (40%), ROIC (40%), Relative EBITDAP Growth (20%) | 109 | 109% of target; paid Feb 24, 2025 . |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 85,403 shares directly/indirectly; includes 54,954 in family trust; plus 3,336 share equivalents; total 88,739 equivalents; <1% of outstanding . |
| Unvested/Outstanding Equity (12/31/2024) | RSRs not vested: 6,882 ($1,300,431); RPSRs at target incl. DEUs: 16,057 ($3,034,276) at $188.97/sh . |
| 2024 Vested Shares (value realized) | 16,167 shares; $4,661,744 (primarily PSUs) . |
| Ownership Guidelines | CEO 7x salary; Kastner at 171% of target as of 2/28/2025 (i.e., exceeds requirement) . |
| Holding Requirements | Pre‑2024 awards: hold ≥50% of net shares for 3 years (continues 1 year post‑separation for vestings in that year); requirement eliminated for awards granted on/after 1/1/2024 . |
| Hedging/Pledging | Prohibited: no hedging; no pledging or margin accounts for officers/directors . |
Insider filings note: a Form 5 reported delayed disclosure of CEO transfers to a family trust; July 12, 2024 Form 4s reported delayed RSR acquisitions/dividends for executives (administrative timing) .
Employment Terms
| Topic | Terms |
|---|---|
| Employment Agreement | None; executives are at‑will . |
| Severance (non‑CIC) | Lump sum 1.5x (base + target bonus); 18 months medical/dental premium; financial planning up to $30,000 in-year and $30,000 following year (CEO); exec physical up to $4,000; outplacement (≤15% of base) . |
| Change‑in‑Control | No CIC agreements/tax gross‑ups; equity acceleration upon CIC+qualifying termination per plan . |
| CIC+Termination (est., 12/31/2024) | Total: $20,628,227 (severance $4,777,500; AIP 2024 $1,225,250; RSR $1,300,431; RPSR $13,043,654; benefits/planning $281,392) . |
| Retirement‑eligible treatment | Pro‑rata vesting of certain RSRs/RPSRs at target per plan; CEO is retirement eligible . |
| Clawback | Dodd‑Frank clawback (3‑year lookback on IBC) adopted Oct 2023; applies to CEO and other covered officers . |
| Deferred Comp | Savings Excess Plan balance $2,743,171 (2024 contributions: employee $393,277; company $157,311) . |
| Pension/SERP | Present value (12/31/2024): OSERP $4,086,650; ERISA 2 $12,988,231; Retirement Plan B $1,878,741; (executive’s pension benefits capped in aggregate at ~60% of final average pay per plan formula) . |
Board Governance
- Role: Director since March 2022; not independent (as CEO); all standing committees are fully independent; Board has an independent, non‑executive Chair (Adm. Kirkland H. Donald) since 2020, mitigating CEO/Chair concentration risk .
- Committee roles: Kastner is not listed on any Board committees; Compensation, Audit, Cybersecurity, Finance, and Governance committees are chaired by independent directors .
- Attendance: Board held 6 meetings in 2024; each director attended ≥75% of Board/committee meetings; independent directors met in executive session at all five regular Board meetings .
- Stockholder oversight: Say‑on‑pay support 96% in 2024 (five‑year range 96–97%), indicating strong investor backing for pay design .
Compensation Structure Analysis
- Mix and gearing: CEO target pay heavily performance‑based with significant equity; 2024 AIP target increased to 145% of salary, further shifting variable mix; LTI remains majority performance‑conditioned (70% PSUs) .
- Annual plan rigor: 2024 corporate OCF under‑achieved (0% credit) while OM modestly above target (102 points), yielding a 65 CPF—indicative of payout sensitivity to cash generation shortfalls .
- Long‑term alignment: 2022‑2024 PSU result 109% shows measured payoff for multi‑year EBITDAP and capital efficiency, with a relative growth component vs S&P A&D peers to mitigate plan calibration risk .
- Risk mitigants: Robust clawback; prohibition on hedging/pledging; ownership guidelines at 7x salary with compliance exceeding target; capped LTI payouts (200%); no employment/CIC agreements .
Equity Ownership & Trading Pressure Indicators
- Vested equity in 2024 (16,167 shares; $4.66M) may create withholding‑related dispositions around vest dates; holding rules on pre‑2024 awards (50% for 3 years) temper near‑term selling pressure; post‑2023 awards are not subject to holding, modestly increasing potential liquidity over time .
- Policy bans hedging/pledging, reducing alignment risk; no pledged shares disclosed; a late Form 5 noted for transfers to a family trust (administrative reporting timing) .
Performance & Track Record
| Measure (FY2024) | Result |
|---|---|
| Consolidated Revenues | $11,535M . |
| Net Earnings | $550M . |
| Diluted EPS | $13.96 . |
| Free Cash Flow | $40M . |
| New Awards | $12.1B; year‑end backlog $48.7B . |
| Cash to Shareholders | $368M (dividends $206M; buybacks $162M) . |
| 1‑Year TSR | −25.7% . |
| Select Operational Milestones | LPD‑29 delivery; New Jersey (SSN‑796) delivery; $9.6B amphibious multi‑ship award; Mission Technologies record revenue and >$12B of awards . |
Compensation Peer Group and Shareholder Feedback
- 2024 peers (16 names) include Textron, L3Harris, Teledyne, TransDigm, KBR, Jacobs, Parker Hannifin, Howmet, Leidos, Booz Allen, Dover, Oshkosh, Spirit AeroSystems, Moog, Curtiss‑Wright, BWX .
- 2025 peer adjustments: Remove BWX, Curtiss‑Wright, Moog; add Cognizant, General Dynamics, Northrop Grumman to align revenue scale ($5–40B) and move HII to ~50th percentile on revenue within the group .
- Say‑on‑pay approvals: 96% (2024), with consistent 96–97% support over five years .
Related Party Transactions and Red Flags
- Related party: CEO’s daughter employed as communications representative; 2024 compensation ~$123,022; reviewed under related‑person policy .
- Section 16(a) compliance: Noted delayed Form 4 filings (7/12/2024) for award acquisitions and dividends across executives and a delayed CEO Form 5 for family trust transfers; otherwise timely .
- Policies: No hedging/pledging; strong independence on committees; no executive tax gross‑ups; no repricing of options disclosed .
Board Service, Committee Roles, Dual‑Role Implications
- Board seat: Director since March 2022; employee‑director (non‑independent) .
- Committee roles: None—consistent with best practice to keep employee‑directors off key committees; all standing committees are independent .
- Leadership structure: Independent, non‑executive Chair (Adm. Donald) with explicit responsibilities (agenda setting, information flow, executive sessions), mitigating CEO+Director dual‑role risks and supporting independent oversight .
Investment Implications
- Alignment and pay outcomes are directionally appropriate: a 65% AIP payout in 2024 reflects cash flow underperformance, while 109% PSU payout over 2022–2024 validates multi‑year targets and execution; design includes strong risk controls (clawback, ownership, no hedging/pledging) .
- Retention risk appears low near‑term: CEO exceeds ownership guidelines (171%), has significant unvested equity and pension value, and participates in a severance plan with 1.5x cash multiple; no evergreen employment/CIC agreements reduce shareholder risk of entrenchment while equity acceleration terms remain standard for the sector .
- Trading‑signal watchlist: PSU/RSR vest schedules (notably 2023–2025 and 2024–2026 cycles) and elimination of post‑grant holding for awards from 2024 may modestly increase potential liquidity around vest dates versus prior policy; ban on hedging/pledging mitigates adverse alignment signals .
- Governance quality is solid: independent chair, fully independent committees, strong say‑on‑pay, and evolving peer set (adding GD/NOC) support defensible pay benchmarking amid scaling programs and Navy workload recovery; however, 2024 TSR of −25.7% underscores execution and affordability risks on legacy pre‑COVID contracts, which are reflected in AIP under‑earn .