David Farnsworth

About David Farnsworth

David E. Farnsworth (age 65) is Executive Vice President and Chief Financial Officer of Mercury Systems, serving since July 2023; he previously was CFO of HawkEye 360 (2020–2023) and held CFO roles at Raytheon’s Integrated Defense Systems and Intelligence, Information, and Services segments . During Mercury’s two-year transformation, TSR improved ~55%, FY25 revenue grew 9.2% to $912.0M, adjusted EBITDA rose to $119.4M, and free cash flow reached $119.0M, while net loss narrowed to $37.9M . In March–August 2025, he also supported broader operating execution and joined V2X (first as a non-voting advisor, then director), underscoring his industry credibility .

Past Roles

Organization	Role	Years	Strategic impact
Mercury Systems (MRCY)	EVP & CFO	2023–present	CFO with expanded responsibilities (ops system, tech investment strategy, customer execution); granted incremental RSUs tied to expanded scope
HawkEye 360	CFO	2020–2023	Led finance for RF data analytics company
Raytheon (Integrated Defense Systems; Intelligence, Information & Services)	CFO (segments)	Pre‑2020	Finance leadership across major defense segments

External Roles

Organization	Role	Years	Strategic impact
V2X Inc.	Non‑voting Board advisor (Mar 2025); Director (Aug 2025)	2025–present	Governance/execution insights at defense services company

Fixed Compensation

Metric	FY 2024	FY 2025
Base salary rate ($)	450,000	463,500
Target bonus (% of salary)	110%	110%
Target bonus ($)	495,000	509,850
Target annual LTI ($)	1,500,000	1,600,000

Performance Compensation

Annual Incentive Plan (AIP) – FY25 design and results

Metric	Weight	Threshold	Target	Maximum	FY25 Actual	Payout factor	Earned weighting
Adjusted EBITDA ($M)	50%	106.3	125.0	143.8	119.4	85.0%	42.5%
Adjusted Free Cash Flow ($M)	35%	44.0	62.8	81.6	119.0	150.0%	52.5%
Organic Revenue ($M)	15%	771.7	857.4	986.0	912.0	121.2%	18.2%
Total AIP payout (% of target)	—	—	—	—	—	—	113.2%

Farnsworth’s FY25 AIP payout: $577,150 (113.2% of $509,850 target) . For FY24, the Committee awarded 40% of target bonuses company‑wide; Farnsworth’s target was 110% of salary for FY24 .

Long‑term incentives (LTI) – grants and structure

Element	FY25 Grant Date	Target value ($)	Shares (target/units)	Vesting	Notes
RSUs (annual)	8/15/2024	720,000	20,876 RSUs	50%/25%/25% annually over 3 years	Converted using 30‑day avg price; Form 4 filed for grant
PSUs (FY25–FY27)	8/15/2024	880,000	25,515 target; threshold 6,379; max 57,409	Cliff vest at 3 years	Metrics: Adj. EBITDA margin (50%) & Organic Revenue (50%), with ±25ppt TSR modifier vs SPADE Defense Index
RSUs (expanded role)	4/15/2025	1,000,000 (target)	22,306 RSUs (ASC 718 FV $1,071,357)	Equal annual over 3 years	Retirement feature: deemed fully vested if retired on/after 8/28/2026; shares distributed on original schedule

PSU FY25 performance (year 1 of cycle): Adj. EBITDA margin 13.1% (50.0% payout on that metric) and organic revenue $912.0M (164.0% payout), producing 35.7% of target shares earned for FY25-year portion; TSR modifier will apply at end of 3-year performance period .

Equity Ownership & Alignment

Beneficial ownership

As of record date	Direct & other	Stock units (RSU/PSU)	401(k)	Total beneficial ownership
Aug 26, 2024	16,677 shares	124,101 stock units	832 shares	141,610
Aug 25, 2025	32,029 shares	129,297 stock units	1,292 shares	162,618

Policy alignment:

Anti‑hedging and anti‑pledging: Company prohibits hedging and pledging of stock .
Stock ownership guideline: CFO must hold stock equal to 4× base salary; retain 50% of net shares until met; expected to meet within 5 years .
Clawback: Financial restatement clawback applies to performance‑ and time‑based awards regardless of fault .

Outstanding unvested awards (as of 6/27/2025; at $53.41/share)

Award	Unvested quantity	Market value ($)
RSUs (8/15/2024 grant)	20,876	1,114,987
RSUs (4/15/2025 grant)	22,306	1,191,363
PSUs (FY25–FY27; max basis per SEC table)	57,409	3,066,215

Insider activity (recent):

Multiple Form 4s reflect RSU grants and standard sell‑to‑cover transactions for tax withholding around August 2024/2025 (e.g., 8/15/2024 RSU grant; amended Form 4 correcting 401(k) holdings; sell‑to‑cover noted by third‑party summaries) .

Employment Terms

Severance framework (qualitative)

Provision	CEO	Other NEOs (incl. CFO)
Standard severance	24 months salary; 2.0× target bonus; prorated in‑year bonus; 24 months medical; outplacement up to $45k; 24 months additional vesting on time‑based; PSUs prorated to actual	12 months salary; 1.0× target bonus; 12 months medical; outplacement up to $30k; 1 year RSU vesting; PSUs prorated to actual
Change‑in‑control (double‑trigger)	3.0× salary+target bonus; prorated in‑year bonus (≥ target or actual to date); full equity vest; PSUs at ≥ target or actual through change‑in‑control	1.5× salary+target bonus; prorated target bonus; full equity vest; PSUs at ≥ target or actual through change‑in‑control; protected period concept applies

CFO quantified severance (as of 6/27/2025)

Scenario	Cash severance ($)	Medical/Outplacement ($)	Accelerated equity ($)	Total ($)
Termination w/o cause or for good reason	973,350	30,000 outplacement	3,438,338	4,441,688
Change‑in‑control + qualifying termination	1,969,875	45,000 outplacement	10,885,799	12,900,674
Death/Disability	—	—	10,885,799	10,885,799

Other terms:

Expanded‑role RSU retirement acceleration (deemed vested if retired on/after 8/28/2026; distributions per original schedule) .
No excise tax gross‑ups; CIC payments reduced if more favorable net of excise tax .

Performance Compensation – Detailed PSU metrics (FY25–FY27 program)

Metric	Weight	FY25 target	FY25 actual	FY25 payout	TSR modifier
Adjusted EBITDA margin	50%	14.6%	13.1%	50.0%	±25ppt vs SPADE Defense Index at end of FY25–FY27
Organic revenue ($M)	50%	857.0	912.0	164.0%	±25ppt modifier applies at end of period
Earned to date (year‑weighted)	—	—	—	35.7% of target shares earned for FY25 portion	—

Say‑on‑Pay & Peer Group (context)

2024 Say‑on‑Pay support: 71% of votes cast following outreach to major holders .
Compensation peer group designed to align with Mercury’s revenue/industry profile (defense tech & electronics), with annual reviews and updates .

Investment Implications

Pay‑for‑performance alignment: AIP metrics and PSU metrics (EBITDA margin, organic revenue, TSR modifier) are tightly linked to core operating levers and shareholder outcomes; FY25 AIP paid 113.2% of target due to strong FCF and revenue progress .
Retention risk: Significant unvested RSUs/PSUs (≈$6.37M in market value at 6/27/25) and double‑trigger CIC protection reduce near‑term attrition likelihood; however, elevated CIC equity acceleration (≈$10.89M) can be a factor in control transactions .
Insider selling pressure: Recent Form 4s indicate routine tax sell‑to‑cover around vest dates rather than discretionary open‑market sales; upcoming scheduled RSU vests (8/15 and 4/15 annually) could create periodic supply but are policy‑constrained by anti‑hedging/pledging and ownership guidelines .
Execution track record: FY25 delivered revenue growth (+9.2%), sharp adjusted EBITDA improvement ($119.4M), and record FCF ($119.0M), aligning incentive payouts with tangible progress; TSR ~55% over the two‑year transformation underscores investor reception .
Governance safeguards: Robust clawback, anti‑hedging/pledging, ownership guidelines (4× salary for CFO), and formulaic incentives mitigate pay risk and enhance alignment .

Appendices

Vesting schedules (selected)

RSUs 8/15/2024: 50% on 8/15/2025; 25% on 8/15/2026; 25% on 8/15/2027 .
RSUs 4/15/2025: 1/3 annually on 4/15/2026/2027/2028; retirement deem‑vest on/after 8/28/2026 (distribution per schedule) .

Company performance context (FY25 vs FY24)

Metric	FY 2024	FY 2025
Revenue ($M)	835.3	912.0
Net Loss ($M)	(137.6)	(37.9)
Adjusted EBITDA ($M)	9.4	119.4
Free Cash Flow ($M)	26.1	119.0

Notes: Adjusted metrics per company’s non‑GAAP reconciliation policies .