William Ballhaus
About William L. Ballhaus
William L. Ballhaus (age 58) is Chairman of the Board, President, and CEO of Mercury Systems, Inc. (MRCY). He joined the Board in June 2022, became interim CEO on June 24, 2023, permanent CEO on August 15, 2023, and Chairman on October 25, 2023 . Under his “strategic transformation,” MRCY’s FY2025 results improved: revenue rose to $912.0M (+9.2% YoY), adjusted EBITDA to $119.4M (from $9.4M), CFO to $138.9M, and FCF to $119.0M, with backlog up to $1.40B and book-to-bill of 1.13x . Management reports approximately 55% total shareholder return over the first two fiscal years of his tenure, while noting risks including a dispute with the former CEO over his resignation .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Blackboard, Inc. | Chairman & CEO | 2016–2021 | Led EdTech company until merger with Anthology, experience in operational transformations and delivering results |
| SRA International, Inc. | CEO & President | 2011–creation of CSRA Inc. | Led IT services; merged U.S. public sector business contributing to CSRA formation |
| DynCorp International | CEO & President | 2008–2010 | Ran government contractor; operational leadership |
| BAE Systems, Boeing, Hughes | Senior leadership roles | Not disclosed | Led global government/commercial tech businesses, focused on software and IT |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| — | Other public company directorships (last 5 years) | — | None disclosed |
Fixed Compensation
| Metric | FY2024 | FY2025 |
|---|---|---|
| Base Salary ($) | $950,000 | $983,000 |
| Target Bonus (% of Salary) | 150% | 150% |
| Target Bonus ($) | $1,425,000 | $1,474,500 |
| Bonus Paid (AIP) ($) | $570,000 (40% of target) | $1,669,134 (113.2% of target) |
| Stock Awards (Grant-date fair value) ($) | $9,036,147 | $7,553,696 |
| Total Compensation ($) | $22,422,508 | $10,229,945 |
Notes:
- FY2024 AIP payouts were discretionarily set at 40% of target despite below-plan results; Ballhaus received $570,000 .
- FY2025 AIP payout for Ballhaus was 113.2% of target driven by adjusted FCF overachievement and revenue performance .
Performance Compensation
Annual Incentive Plan (FY2025)
| Measure | Weight | Threshold | Target | Maximum | Actual | Payout Factor |
|---|---|---|---|---|---|---|
| Adjusted EBITDA ($M) | 50% | 106.3 | 125.0 | 143.8 | 119.4 | 85.0% |
| Adjusted Free Cash Flow ($M) | 35% | 44.0 | 62.8 | 81.6 | 119.0 | 150.0% |
| Organic Revenue ($M) | 15% | 771.7 | 857.4 | 986.0 | 912.0 | 121.2% |
| Total AIP Payout (% of target) | — | — | — | — | — | 113.2% |
Ballhaus AIP payout amount: $1,669,134 (113.2% of $1,474,500 target) .
Long-Term Incentive (Structure and FY2025 Grants)
| Component | CEO Weight | Vesting | Performance Metrics |
|---|---|---|---|
| PSUs | 60% of LTI | 3-year cliff (FY2025–FY2027) | 50% Adjusted EBITDA Margin; 50% Organic Revenue; TSR modifier ±25% vs SPADE Defense Index |
| RSUs | 40% of LTI | 50% / 25% / 25% annually over 3 years | Time-based |
FY2025 PSU goals (year 1 of the FY2025–FY2027 awards):
| Metric | Threshold | Target | Maximum | FY2025 Actual | Financial Payout Factor |
|---|---|---|---|---|---|
| Adjusted EBITDA Margin (%) | 13.1% | 14.6% | 16.1% | 13.1% | 50.0% |
| Organic Revenue ($M) | 771.0 | 857.0 | 943.0 | 912.0 | 164.0% |
TSR Modifier schedule for FY2025–FY2027 PSU: -25% at <25th percentile; 0% at 50th–55th; +25% at ≥75th percentile vs SPADE Defense Index .
Ballhaus FY2025 grants:
| Grant Type | Grant Date | Shares/Target | Maximum Shares | Notes |
|---|---|---|---|---|
| PSUs | 8/15/2024 | 103,508 target | 232,893 max | ASC 718 fair value $4,785,175 |
| RSUs | 8/15/2024 | 69,006 | — | ASC 718 fair value $2,768,521 |
FY2024 CEO pay design added premium-priced options requiring substantial share price appreciation (≥$57.71 during each of two years ended Aug 17, 2027 & 2028) and matching RSUs contingent on a $1.5M personal stock purchase held through Aug 17, 2026, to strengthen alignment .
Equity Ownership & Alignment
| Category | Shares/Value | Detail |
|---|---|---|
| Beneficial Ownership (as of 8/25/2025) | 383,198 shares; <1% | Includes 72,426 direct, 26,683 joint, 7,066 family trust, 275,867 RSUs/PSUs, 1,156 via 401(k) |
| Unvested RSUs | 69,006 (FY2025 grant) | Market value $3,685,610 at $53.41 close on 6/27/2025 |
| Prior RSUs | 42,839 | Market value $2,288,031 (same valuation basis) |
| PSU Outstanding | 232,893 (FY2025 award, shown at max per SEC rule) | Market value $12,438,815 at 6/27/2025 close (max basis) |
| PSU Outstanding (prior cycles) | 23,243 (shown at threshold per SEC rule) | Market value $1,241,409 |
| Stock Options (premium-priced, granted 8/17/2023) | 233,500 @ $42; 233,500 @ $43; 233,500 @ $46; 233,500 @ $49 | Expire 2027–2028; vest one year before expiration; auto-exercise feature applies if in the money |
| Matching RSU (new-hire) | Vests 8/17/2026 | Contingent on maintaining $1.5M personal share purchase through vest date |
Policies:
- Stock ownership guidelines: CEO 6x salary; retention of 50% of net shares until met .
- Anti-hedging and anti-pledging: Hedging/pledging prohibited; broad clawback covers restatements and time-based awards .
- Director and executive ownership guidelines and governance best practices reiterated in 2025 LTI Plan .
Employment Terms
| Scenario | Cash Severance | Equity | Benefits/Other |
|---|---|---|---|
| Termination without cause / Good reason (CEO) | 24 months base salary + lump-sum 2x target bonus + prorated current-year bonus | +24 months vesting for time-based; PSU pro rata based on full-period actual performance | Up to $45,000 outplacement; medical up to 24 months |
| Change-in-control (Double trigger) (CEO) | Lump-sum 3x (salary + target bonus) + prorated bonus at ≥target or actual-to-date | Full acceleration; PSUs paid at greater of target or actual-to-date; if awards not assumed, immediate full vesting | Up to $45,000 outplacement; medical up to 24 months; excise tax cutbacks apply |
| Death/Disability | Immediate vesting; PSUs based on actual performance through most recent quarter (CEO through full period) | — | — |
Quantified potential payouts (as of 6/27/2025):
| Event | Total ($) |
|---|---|
| Without cause / Good reason | $28,367,731 |
| Change-in-control (double trigger) | $44,747,162 |
| Death/Disability | $35,614,467 |
Board Governance
- Role and independence: Ballhaus is Chairman and CEO; not independent. Board policy prefers an independent Chair but determined combined role was appropriate; a Lead Independent Director presides over executive sessions and shapes agendas .
- Board committees are 100% independent; Ballhaus serves on no committees as CEO .
- Board activity and oversight: 12 Board meetings in FY2025; all directors attended ≥75% of meetings; independent director executive sessions held regularly (five in FY2025) .
- Governance practices: Majority voting in uncontested elections; classified board; anti-hedging/pledging; clawbacks; no poison pill; succession planning; strong ERM oversight .
Performance & Track Record
| Metric | FY2024 | FY2025 |
|---|---|---|
| Revenue ($M) | $835.3 | $912.0 |
| Adjusted EBITDA ($M) | $9.4 | $119.4 |
| CFO ($M) | $60.4 | $138.9 |
| FCF ($M) | $26.1 | $119.0 |
| Bookings ($B) | $1.02 | $1.03 |
| Backlog ($B) | $1.33 | $1.40 |
| Book-to-bill (x) | 1.22 | 1.13 |
Additional context:
- TSR approximately 55% over the first two fiscal years of transformation; emphasis on margin expansion, cash release, and predictable performance .
- FY2025 shareholder say-on-pay: 2024 vote support was 71%; 2023 prior vote rebounded to 97% after program changes; continued engagement in 2025 .
- Risks noted include litigation with former CEO; operational execution risk on large programs; activist presence (JANA 9.9% owner as of record date) .
Compensation Structure Analysis
- Strong variable pay mix: ~88% of CEO target pay is variable (AIP + LTI) in FY2025, balancing short-term and long-term incentives .
- Shift to performance-based equity: PSUs increased to 60% of CEO LTI; absolute financial measures and a relative TSR modifier vs SPADE Defense Index; maximum payout reduced from prior 300% to 200% plus TSR modifier up to ±25% .
- Premium-priced options and matching RSU tied to personal investment: New-hire design requires sustained stock price increases and personal skin-in-the-game, reinforcing alignment and discouraging short-termism .
- Best-practice LTI plan features: Double-trigger CIC, no repricing, no liberal share counting, minimum vesting, clawbacks covering time-based awards, hedging/pledging prohibitions .
Equity Ownership & Alignment Signals
- Meaningful beneficial ownership: 383,198 shares, including substantial unvested equity and premium-priced options; indicates alignment, with formal executive stock ownership guidelines requiring 6x salary and retention of 50% net shares until met .
- No pledging/hedging: Company-wide prohibitions reduce misalignment risk from collateralization or downside hedges .
- Upcoming vesting/events potentially impacting supply: RSU tranches in 2026–2027; matching RSU vesting Aug 2026; PSU cliff in 2027; option auto-exercise at expiry if in the money in 2027–2028 .
Employment Terms
- Retention protection: Significant CIC multiples and full acceleration upon qualifying termination support continuity, but create cost in change-of-control scenarios; excise tax cutback applies to avoid golden parachute taxes .
- Standard severance protects CEO with 24 months base continuation and 2x target bonus; PSU treatment remains performance-based, preserving pay-for-performance orientation .
Investment Implications
- Alignment strengths: High variable pay, performance-weighted PSUs with EBITDA margin and revenue, TSR modifier, premium-priced options, and personal stock commitment support shareholder alignment and execution focus .
- Near-term selling pressure: Scheduled RSU vesting through 2027 and auto-exercise features may create periodic supply; however, pledging/hedging bans and ownership guidelines mitigate misalignment risk .
- Execution and governance risks: Ongoing program execution challenges and litigation with former CEO are noted; combined CEO-Chair role is balanced by a Lead Independent Director and fully independent committees .
- Shareholder feedback: Say-on-pay at 71% in 2024 suggests room for continued engagement; compensation program changes and improved FY2025 performance underpin momentum, but sustained delivery on margin and cash conversion remains critical .
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