Phillip Carrai
KRATOS DEFENSE & SECURITY SOLUTIONSAbout Phillip Carrai
Phillip Carrai is President of Kratos Defense & Security Solutions’ Space, Training & Cyber Solutions division and has served in this role since December 2009; he is 63 years old. He holds a bachelor’s degree in Information Science and Accounting from Indiana University of Pennsylvania and an MBA from Carnegie Mellon University . Company performance under the current leadership regime shows 2024 revenue of $1.136B (up from $1.037B in 2023) and Adjusted EBITDA of $105.7M (up from $95.4M), with year-end stock price rising from $20.29 (2023) to $26.52 (2024) . His division’s footprint aligns with major awards, including Space Force SATCOM C2 ($579M single-award IDIQ, if all options exercised) and U.S. Space Development Agency AFCGI ($116.7M), though the space and satellite business faced a $47.8M revenue reduction in 2024 due to OEM satellite delays impacting operators (Kratos’ customers) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Kratos (Space, Training & Cyber) | President | Dec 2009–present | Leads space ground systems, satcom, cyber/training; large IDIQs and SDA awards |
| Kratos (Space, Training & Cyber) | EVP | Jul 2008–Dec 2009 | Division leadership transition |
| SYS (pre-merger with Kratos) | President, Information Technology Solutions | Oct 2006–Jun 2008 | Led IT solutions; SYS merged with Kratos in 2008 |
| Ai Metrix, Inc. | CEO | 2003–2006 | Telecom software; acquired by SYS in 2006 |
| Morino Group | Managing Director | 2000–2003 | Investment/operating advisory roles |
| General Atlantic | Special Advisor | 2000–2003 | Growth equity advisory |
| Ztango, Inc. | Executive Chairman | ~2000–2003 | Mobile services/software oversight |
| Internosis Incorporated | Board Member | ~2000–2003 | IT services governance |
| McCabe and Associates | CEO | 1997–2000 | Testing/analysis software leadership |
| Legent Corporation | Various executive roles | 1989–1996 | Enterprise software operations |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Morino Group | Managing Director | 2000–2003 | Investment/operating advisor |
| General Atlantic | Special Advisor | 2000–2003 | Strategic advisory |
| Ztango, Inc. | Executive Chairman | 2000–2003 | Governance/execution |
| Internosis Incorporated | Board Member | 2000–2003 | Board oversight |
Fixed Compensation
| Element | 2024 | Notes |
|---|---|---|
| Base Salary | $450,000 | As disclosed for 2024 |
| Target Bonus % of Salary | Up to 60% | Per Carrai Employment Agreement (operational NEOs at 60%) |
| Actual Bonus Paid (Cash) | $60,750 | 22.5% of target for 2024 |
| Other Compensation (2024) | $32,833 | Includes 401(k) match ($15,525) and PTO cash-out ($17,308) |
Performance Compensation
Annual Cash Incentive Structure (Operational NEOs like Carrai)
| Metric | Weight | Threshold to Earn | Notes |
|---|---|---|---|
| Business Division Adjusted EBITDA | 30% | ≥90% of target | Must meet ≥90% Adjusted EBITDA for any financial payout |
| Business Division Revenue | 15% | ≥90% of target | Division-specific |
| Business Division Free Cash Flow | 20% | ≥90% of target | Division-specific |
| Consolidated Adjusted EBITDA | 10% | ≥90% of target | Corporate metric |
| Non-Financial/Strategic Objectives | 25% | Rigorous qualitative goals | Set at year start; evaluated at year-end |
| Payout Cap | 100% of target | No upside beyond target | Company caps at 100% vs peers 150–300% |
Long-Term Equity Incentives (RSUs)
| Award | Grant | Vesting | Performance Metric | Payout Mechanics |
|---|---|---|---|---|
| Time-based RSUs (2024) | 50,000 | Ratable over 5 years | N/A | Time-based retention |
| Performance-based RSUs (2024) | 50,000 | 5-year performance window | Adjusted EBITDA Growth | 33.3% vests for each 10% EBITDA growth; 10% minimum to vest any; 30% growth earns 100% PSUs |
| Time-based RSUs (2025) | 50,000 | Ratable over 5 years | N/A | Similar structure continued |
| Performance-based RSUs (2025) | 50,000 | 5-year performance window | Adjusted EBITDA Growth (baseline 2024) | More challenging off record 2024 EBITDA |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total Beneficial Ownership | 340,531 shares (includes ~4,023 401(k), 11,385 ESPP, 46,644 in trust) |
| Ownership % of Outstanding | Less than 1% (asterisk) |
| Unvested RSUs (12/29/2024) | 266,667 units; market value $7,072,009 at $26.52/share, assuming target for performance RSUs |
| Vested vs Unvested | Significant unvested PSUs remain at risk against EBITDA benchmarks; many grants include change-of-control acceleration |
| Options | Company does not currently grant options; RSU-only practice in 2024 |
| Pledging/Hedging | Prohibited under Company policy for directors/executive officers |
| Ownership Guidelines | CEO has 5x salary guideline; no disclosed multiple for Carrai |
| Trading Plan (Potential Selling Pressure) | Adopted Rule 10b5‑1 plan on 8/26/2025 for up to 78,000 shares through 12/31/2026 (pre-scheduled) |
Employment Terms
| Provision | Carrai Employment Agreement (Jan 1, 2023) |
|---|---|
| Base Salary | $450,000; eligible for annual increases per Company policy |
| Annual Incentive | Discretionary, up to 60% of base salary |
| Severance – Termination Without Cause | 12 months of base salary and any earned incentive; subject to release |
| Change-in-Control Severance | If terminated without cause upon change-in-control: 12 months base; accelerated vesting of RSUs (value $7,072,009 at 12/29/2024) |
| Equity Acceleration | Certain RSUs may vest upon termination without cause and/or change-in-control per award terms |
| Cause Definition | Misconduct, willful policy violation or refusal, material breach, loyalty breach |
| Non-Compete / Non-Solicit | Not specifically disclosed for Carrai in proxy |
| Clawback | Company-wide incentive compensation recoupment aligned with Rule 10D‑1 and NASDAQ |
Company Performance Context (for pay-for-performance alignment)
| Metric | FY 2023 | FY 2024 |
|---|---|---|
| Revenue ($USD Billions) | $1.037 | $1.136 |
| Adjusted EBITDA ($USD Millions) | $95.4 | $105.7 |
| Year-End Stock Price ($USD) | $20.29 | $26.52 |
Additional Compensation & Governance Signals
- Say-on-Pay approval was 92.22% at the 2024 Annual Meeting, indicating broad shareholder support for the NEO program .
- Equity mix emphasizes performance: ~50% PSUs tied to multi-year Adjusted EBITDA growth; unvested PSUs remain meaningfully at risk as thresholds rise off record 2024 levels .
- Anti-hedging and anti-pledging policy is in force for executives and directors; clawback updated to comply with Rule 10D‑1 .
Risk Indicators & Execution Watchpoints
- Space & Satellite headwinds: $47.8M revenue decline in 2024 due to OEM delays on software-defined satellites to operator customers—directly relevant to Carrai’s division exposure .
- Pre‑scheduled selling: adoption of a Rule 10b5‑1 plan for up to 78,000 shares could introduce measured supply into the market; monitor execution and vesting/tax events .
- Change-in-control equity: RSU acceleration upon change-in-control introduces potential overhang scenarios, though severance for Carrai is 12 months base salary without large cash multiples .
Investment Implications
- Pay-for-performance alignment is strong: Carrai’s incentives tie primarily to divisional EBITDA, revenue, and free cash flow with high 90% thresholds, plus multi-year PSUs linked to Adjusted EBITDA growth—supporting long-term value creation discipline .
- Retention risk appears moderate: 12-month cash severance without bonus multiples, but substantial unvested PSUs and 5-year time-based RSUs provide retention hooks; anti-pledging limits misalignment .
- Execution risk in Space/Satcom persists due to OEM schedules; however, large IDIQ awards (Space Force SATCOM C2; SDA AFCGI) and backlog growth provide multi-year visibility contingent on program timetables .
- Insider trading plan suggests potential selling cadence into 2026; calibrate trading/liquidity expectations around vesting periods and pre-planned dispositions .