Deanna Lund
Executive Vice President and Chief Financial Officer at 
KRATOS DEFENSE & SECURITY SOLUTIONS
KRATOS DEFENSE & SECURITY SOLUTIONSExecutive
Board
About Deanna Lund
Executive Vice President & Chief Financial Officer of Kratos since April 2004 and a director since May 2021; age 57; B.S. Accounting (magna cum laude), San Diego State University; Certified Public Accountant . Kratos delivered 2024 revenue of $1.136 billion and Adjusted EBITDA of $105.7 million, alongside record backlog of $1.445 billion; Kratos’ share price rose from $20.29 at 2023 year‑end to $26.52 at 2024 year‑end, underscoring positive TSR during her latest reported year . Lund is not an independent director under NASDAQ rules due to her executive role; she is not assigned to Board committees .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Titan Corporation | Vice President & Corporate Controller | 1998–2004 | Oversaw public‑company financial reporting through sale to L‑3; corporate finance leadership . |
| Titan Corporation | Corporate Controller | 1996–1998 | Advanced controllership responsibilities ahead of VP promotion . |
| Titan Corporation | Corporate Manager, Operations Analysis | 1993–1996 | Drove performance analysis and operational finance . |
| Arthur Andersen LLP | Auditor/Staff | Pre‑1993 | Public accounting foundation; CPA credential . |
External Roles
| Organization | Role | Years |
|---|---|---|
| Not disclosed | — | — |
| No other public or private board roles disclosed for Lund in Company filings . |
Fixed Compensation
Multi‑year compensation (USD):
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary | $460,000 | $460,000 | $460,000 |
| Stock Awards (grant‑date fair value) | $2,947,500 | $1,504,500 | $2,779,500 |
| Annual Cash Bonus (Non‑Equity Incentive) | $138,000 | $258,750 | $342,677 |
| All Other Compensation | $48,209 | $48,650 | $67,817 |
| Total Compensation | $3,593,709 | $2,271,900 | $3,649,994 |
2024 annual incentive target and payout:
| Item | FY 2024 |
|---|---|
| Target Annual Cash Bonus | $345,000 (corporate NEO plan) |
| Actual Cash Bonus Paid | $342,677 (99.3% of target) |
Notes:
- “All Other” for 2024 comprises PTO cash‑out $53,077 and 401(k) match $14,740 .
- For corporate NEOs (CEO & CFO), maximum target annual bonus range is 75%–100% of base salary under plan design . For 2025, the Compensation Committee increased Lund’s target bonus to 100% of base, reflecting expanded responsibilities .
Performance Compensation
Annual cash bonus metrics and weightings (corporate NEO design):
| Metric | Weighting | Thresholds | Payout Mechanics |
|---|---|---|---|
| Consolidated Adjusted EBITDA | 25% | ≥90% of goal to earn any payout | Proportional payout against target if threshold met . |
| Consolidated Revenue | 10% | ≥90% of goal | As above . |
| Consolidated Free Cash Flow | 25% | ≥90% of goal | As above . |
| Non‑Financial Strategic Objectives | 40% | Committee assessment | Qualitative payout . |
Long‑term equity (RSUs) – grant structure and vesting:
| Grant Year | Time‑Based RSUs | Performance‑Based RSUs | Vesting Terms | Performance Measure |
|---|---|---|---|---|
| 2024 | 75,000 | 75,000 | TB: ratable over 5 years; PB: may vest annually within 5‑year period | 33.3% vests for each 10% increase in Adjusted EBITDA vs 2023 baseline . |
| 2025 | 75,000 | 75,000 | Same structures as 2024 | 33.3% per 10% Adjusted EBITDA growth vs record 2024 base (progressively harder) . |
Realized vesting (FY 2024):
- Shares vested: 335,000; value realized: $6,148,200 (includes achievement at 100% for 2023 PB RSUs, 33.3%/66.6% for earlier PB RSUs) .
Program governance and safeguards:
- No stock options currently granted; RSUs used for LTI .
- Anti‑hedging/anti‑pledging policy for directors and executive officers .
- Clawback policy updated to comply with Rule 10D‑1 and NASDAQ, broader than SOX .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership (3/17/2025) | 337,136 shares; includes ~19,988 in 401(k) and 16,626 via ESPP; <1% of outstanding . |
| Shares Outstanding (Record Date 3/17/2025) | 153,285,643 . |
| Unvested RSUs Outstanding (12/29/2024) | 400,000; aggregate market value $10,608,000 (assumes target for PB RSUs; price $26.52) . |
| Shares Acquired on Vesting (FY 2024) | 335,000; $6,148,200 realized . |
| Hedging/Pledging | Prohibited for directors and executive officers . |
| Ownership Guidelines | CEO has 5x base salary guideline; other executive guidelines not disclosed . |
Insider selling pressure considerations:
- Five‑year ratable vesting of TB RSUs and potential annual PB vesting can create periodic supply as awards deliver; Lund had 335,000 shares vest in 2024 . Trading is governed by Company insider trading policy .
Employment Terms
Severance and change‑of‑control (COC) economics (Second Amended & Restated Severance and COC Agreement, 8/4/2011):
| Scenario | Cash Severance | Health Continuation | Equity Acceleration | Notes |
|---|---|---|---|---|
| Termination without cause (no COC) | 1x base salary ($460,000) | 1 year ($32,577 aggregate cost) | 100% of unvested equity accelerates ($10,608,000 at 12/29/2024) | Single‑trigger acceleration under legacy agreement; RSU agreements otherwise include double‑trigger subject to employment agreements . |
| Termination after COC (“triggering event”) | 2x base + 2x maximum potential bonus ($1,610,000 total cash) | 2 years ($65,154 aggregate cost) | 100% of unvested equity accelerates ($10,608,000) | Agreement includes excise tax gross‑up if payments deemed excess parachute (red flag) . |
Additional terms:
- Timing may be adjusted for 409A compliance .
- Company policy: no new agreements with excise tax gross‑ups; legacy provisions remain until amended .
Board Governance
| Attribute | Detail |
|---|---|
| Board Service | Director since 2021 . |
| Independence | Not independent (executive officer per NASDAQ Rule 5605(a)(2)) . |
| Committees | None (no committee assignment shown) . |
| Attendance | All directors attended ≥75% of Board/committee meetings in 2024 . |
| Executive Sessions | Held with independent directors at each regular Board meeting, without management . |
| Director Compensation | As an employee director, Lund receives no additional director compensation (per 2021 appointment 8‑K) . Non‑employee director fee schedule (cash retainers and 10,000 RSUs annually) applies to outside directors only . |
| Board Leadership | Separate Chairman (William Hoglund) and CEO; compensating governance structure . |
Compensation Structure Analysis
- Mix and pay‑for‑performance: Lund’s 2024 total compensation includes a majority at‑risk through RSUs and performance‑based cash, aligned to revenue, FCF, and Adjusted EBITDA thresholds (≥90% to earn) . RSUs split 50% time‑based, 50% performance‑based tied to multi‑year Adjusted EBITDA growth; 2025 PB hurdles are harder off record 2024 EBITDA .
- Trend and calibration: 2023→2024 increases in stock awards and bonus reflect Company over‑achievement against transformational 2024 goals (revenue ~99.3% of plan; EBITDA up; bookings/backlog records) .
- Governance safeguards: Anti‑hedging/pledging and updated clawback; no options; double‑trigger COC on new equity awards (subject to legacy employment agreements) .
- Red flags: Legacy severance agreement includes single‑trigger acceleration for termination without cause and excise tax gross‑up under 280G (shareholder‑unfriendly provisions, though Company avoids such terms in new agreements) .
Performance Context (Company)
| Metric | FY 2023 | FY 2024 |
|---|---|---|
| Revenues | $1.037B | $1.136B |
| Adjusted EBITDA | $95.4M | $105.7M |
| Year‑end Share Price | $20.29 (12/29/2023) | $26.52 (12/27/2024) |
| Backlog (year‑end) | — | $1.445B |
Director Compensation (Context for Board Governance)
Non‑employee director fees (quarterly cash retainers) and annual RSU grants:
| Component | Amount |
|---|---|
| Board Member Quarterly Retainer | $12,500 |
| Board Chairman Quarterly Fee | $7,500 |
| Committee Chair Quarterly Retainer | $3,750 (Audit/Comp/Nom‑Gov) |
| Committee Member Quarterly Fee | $1,500 (Audit/Comp); $1,250 (Nom‑Gov) |
| Designated Financial Expert Quarterly Fee | $1,250 |
| Annual Equity Award | 10,000 RSUs; one‑year vest |
Lund as an employee director does not receive this program .
Equity Grants Detail (2024 Grants of Plan‑Based Awards)
| Name | Grant Date | Time‑Based RSUs (#) | Performance‑Based RSUs (#) | Grant‑Date Fair Value (Total) |
|---|---|---|---|---|
| Deanna Lund | 1/4/2024 | 75,000 | 75,000 | $2,779,500 |
Grant mechanics: TB RSUs vest in five equal annual installments; PB RSUs vest 33.3% for each 10% Adjusted EBITDA increase during the 2024–2028 performance window .
Say‑on‑Pay & Peer Benchmarking
- Say‑on‑Pay approval: 92.22% support at 2024 Annual Meeting .
- Peer group used for pay benchmarking (small/mid A&D/government contractors): AAR, AeroVironment, Barnes Group, Comtech, Ducommun, Hexcel, Kaman, Mercury Systems, Palantir, V2X, VSE (and Leonardo DRS added for 2025) .
- CEO base set to ~75th percentile for 2025; Committee targets mid‑range positioning overall .
Related Party & Risk Indicators
- Related‑party transactions: None requiring disclosure in 2024 .
- Legal proceedings: Not disclosed in proxy .
- Policies: Anti‑hedging/pledging, insider trading policy, clawback updated to Rule 10D‑1 .
- Potential governance concern: Legacy severance excise tax gross‑up for Lund .
Investment Implications
- Alignment: High at‑risk pay mix with multi‑year PB RSUs tied to Adjusted EBITDA growth, plus annual bonus tied to revenue/FCF/EBITDA, supports pay‑for‑performance and cash flow focus; 2024 payout at 99.3% signals delivery against plan .
- Retention/overhang: Significant unvested RSUs (400,000; $10.6M value) and annual vesting cadence can generate periodic supply; monitor Form 4 activity around vest dates and blackout windows as a trading signal .
- Change‑of‑control and severance: Single‑trigger acceleration and 280G gross‑up in Lund’s legacy agreement increase transaction costs and may incentivize deal acceptance; note Company stance to avoid new gross‑ups (mitigant) .
- Governance: Dual role (CFO + director) without committee memberships and clear independence designation reduces committee conflicts; director fees not paid to employee directors (shareholder‑friendly) .
- Performance backdrop: Strong revenue and EBITDA trajectory in 2024, record backlog, and share price appreciation underpin compensation outcomes; PB RSU hurdles for 2025 are tougher off a higher base, which lowers windfall risk and improves forward alignment .