Prabu Natarajan
Science Applications InternationalAbout Prabu Natarajan
Executive Vice President and Chief Financial Officer of SAIC since January 4, 2021; previously held senior finance roles at Northrop Grumman including VP Financial Strategy & Planning, VP M&A, Acting VP Tax, CFO of Information Systems, and Corporate VP & Treasurer. Legal and finance credentials include an LL.B. from the University of Madras and LL.M. from Harvard Law School; prior roles at PwC and AES Corporation . Fiscal 2025 company performance context: revenue $7.479B (+$35M YoY, ~3.1% organic), adjusted diluted EPS $9.13 (+16% YoY), adjusted EBITDA margin 9.5% (vs. 9.0% prior year), $535M operating cash flow excluding receivables sale, and capital returns of $602M ($527M buybacks, $75M dividends) . FY2025 TSR was -15% (below broader market and tech index); FY23–FY25 relative TSR ranked below tech index but above broader market over three years .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Northrop Grumman | VP Financial Strategy & Planning; VP M&A; Acting VP Tax; CFO, Information Systems; Corporate VP & Treasurer | 2011–2020 | Led corporate finance, M&A, treasury, tax and business unit CFO functions in aerospace/defense, supporting growth strategy and capital allocation . |
| PricewaterhouseCoopers | Various roles | Not disclosed | Professional services foundation in accounting/tax; supported transition to corporate finance leadership . |
| AES Corporation | Senior finance roles | Not disclosed | Corporate finance experience in energy sector, broadening capital markets and operational finance expertise . |
External Roles
No external public company directorships disclosed for Prabu Natarajan in SAIC filings .
Fixed Compensation
| Metric | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Base Salary ($) | $663,462 | $696,154 | $716,923 |
| Target Bonus % of Salary | 100% (policy) | 100% (STI design) | 100% (STI design) |
| All Other Compensation ($) | $12,450 | $27,538 | $15,131 |
| Notes | Initial CFO comp included $600,000 base, $500,000 sign-on bonus and $500,000 RSU sign-on; long-term awards $1.25M scheduled for April 2021 . | — | CD&A indicates FY2025 base salary set at $720,000 (+2.9% vs. FY2024) for NEO target-setting; Summary Compensation Table reflects actual paid within fiscal year timing . |
Performance Compensation
Annual Short-Term Incentive (STI) – Company Metrics and Payout
| Financial Measure | Weight | Threshold | Target | Maximum | Actual | % of Target Achieved | Payout % |
|---|---|---|---|---|---|---|---|
| Revenue | 33.3% | $7.292B | $7.542B | $7.763B | $7.479B | 99.2% | 87.4% |
| Adjusted EBITDA | 33.3% | $682M | $700M | $722M | $705M | 100.7% | 122.7% |
| Adjusted Operating Cash Flow | 33.3% | $510M | $525M | $540M | $538M | 102.5% | 186.7% |
| STI Financial Score | — | — | — | — | — | — | 132.3% |
| Executive | Base Salary | STI Target (% of Salary) | Financial Score | Cash Incentive Paid |
|---|---|---|---|---|
| Prabu Natarajan | $720,000 (target basis) | 100% | 132.3% | $1,143,072 |
Notes:
- Leadership multiplier range expanded to 0.5–1.2 in FY2025 to differentiate performance; final multipliers applied per Committee discretion, not individually disclosed .
- STI metrics align to profitable growth and cash generation; non-GAAP reconciliations provided in Appendix .
Long-Term Incentive Design and Outcomes
| Component | Weight | Vesting | Performance Metrics | Measurement Framework |
|---|---|---|---|---|
| PSUs (Performance RSUs) | 60% | 3-year cycle (FY2025–FY2027) | Cumulative Adjusted EBITDA (33.3%), Cumulative Adjusted Operating Cash Flow (33.3%), Relative TSR vs. peer group (33.3%) | TSR thresholds at 25th/50th/75th percentile for 50%/100%/200% payout; straight-line interpolation; financial targets set at cycle start and not publicly disclosed . |
| RSUs (Time-based) | 40% | 33% annually over 3 years | — | Dividend equivalents accrue and pay upon vesting; aligns pay to stock price and retention . |
PSU Certification (FY2023–FY2025 cycle):
| Metric | Weight | Threshold | Target | Maximum | Actual | % of Target Achieved | Payout % |
|---|---|---|---|---|---|---|---|
| Cumulative Adjusted EBITDA | 33% | $1.755B | $2.065B | $2.375B | $2.060B | 99.8% | 99.2% |
| Cumulative Adjusted Op. Cash Flow | 33% | $1.390B | $1.737B | $2.084B | $1.865B | 107.4% | 136.9% |
| Relative TSR | 33% | 25th pct | 50th pct | 75th pct | 66.7th pct | 133.3% | 166.7% |
| Cycle Payout | — | — | — | — | — | — | 134.2% |
FY2025 Grants (Prabu Natarajan):
| Award Type | Grant Date | Target Shares | Threshold | Maximum | Grant-Date Fair Value ($) |
|---|---|---|---|---|---|
| PSUs | 04/05/2024 | 7,879 | 3,940 | 15,758 | $1,015,839 |
| RSUs | 04/05/2024 | 5,253 | — | — | $680,106 |
Vesting schedules:
- RSUs: 33% on each anniversary of grant (e.g., 04/05/2025, 04/05/2026, 04/05/2027) .
- PSUs: Earn-and-pay at end of three-year performance period (FY2025–FY2027) per certified results .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total Beneficial Ownership | 54,054 common shares owned directly/indirectly; none of the directors or executive officers pledge shares; as a group directors/executives own ~0.44% . |
| Unvested RSUs at FY2025 Year-End | 5,253 (2024 grant); 3,709 (2023 grant); 2,171 (2022 grant); market values reflect $108.28/share on 01/31/2025 . |
| Unearned PSUs at FY2025 Year-End | 15,758 (2024 grant); 16,690 (2023 grant); market values reflect $108.28/share; shown at maximum potential subject to certification . |
| Shares Vested in FY2025 | 47,053 vested from RSUs/PSUs; realized value $5,317,300 at vest dates . |
| Stock Ownership Guidelines | 3x base salary for NEOs; Natarajan has satisfied ownership goal; executives must hold 100% of net shares until guideline met . |
| Hedging/Pledging | Executives prohibited from hedging, short sales, derivatives, pledging, or purchasing on margin; all trades require pre-clearance . |
Employment Terms
| Term | Provision |
|---|---|
| Appointment & Start Date | Appointed CFO effective January 4, 2021 . |
| Employment Agreement | SAIC does not provide employment agreements for executive officers . |
| Severance (No CIC) | Lump sum 1.5x (CFO) of current base salary + average of last 3 actual annual bonuses; 18 months COBRA cash; up to $25,000 outplacement (12 months); pro-rata annual bonus per company performance; continued vesting of prior equity per original schedule (no proration/min holding) . |
| Change-in-Control (Double Trigger) | Lump sum 2x (CFO) of current base salary + target bonus; 24 months COBRA cash; up to $25,000 outplacement; pro-rata target bonus; equity per 2013/2023 plan: RSU/option accelerate if not assumed or upon qualifying termination within 18 months of CIC; PSUs settle based on completed years + pro-rata for year of CIC . |
| Retirement Eligibility | Continued vesting of RSUs/options (subject to 12-month holding on award and age/service criteria) and pro-rata PSUs similar to disability; COBRA cash (18 months CFO); pro-rata actual annual bonus; retiree health pool access until Medicare . |
| Non-Compete | Two-year non-compete required to receive severance/retirement benefits . |
| Tax Gross-Ups | No excise tax gross-ups; best-net cutback vs. full pay to optimize after-tax outcome . |
| Clawback | Mandatory SEC Rule 10D-1 recovery policy; discretionary recoupment for restatements, fraud, or misconduct (cash and equity) . |
| Deferred Compensation | Eligible for SAIC Deferred Compensation Plan; FY2025 contributions $423,385, earnings $61,462, end balance $865,980 . |
Estimated Payments (CFO) at 01/31/2025 (illustrative from proxy):
| Scenario | Total ($) |
|---|---|
| Without Cause (No CIC) | $6,303,113 |
| Without Cause/Good Reason (With CIC) | $5,832,115 |
| Retirement | $3,792,063 |
| Death | $2,133,855 |
| Disability | $2,133,855 |
Compensation Structure Analysis
- Mix and pay-for-performance: Majority of compensation at risk via STI and PSUs/RSUs; base salary is the smallest component for NEOs; target benchmarking at market median; FY2025 STI paid at 132.3% on financials, with leadership multiplier overlay .
- Equity emphasis: FY2025 LTI split 60% PSUs (three-year EBITDA, cash flow, rTSR) and 40% RSUs (time-based), with FY23–FY25 PSU cycle certifying at 134.2% of target; dividend equivalents accrue to earned units .
- Governance protections: Double-trigger CIC terms, robust clawbacks, hedging/pledging prohibitions, and ownership/holding requirements enforce alignment and risk mitigation .
- Peer benchmarking: Compensation peer group of 13 companies (BAH, CACI, LDOS, DXC, HII, ICFI, KBR, MMS, PSN, TTEK, TXT, CGI, Jacobs) set in fall 2023; market median targeting; ManTech removed due to acquisition, ICFI added .
- Shareholder feedback: Say-on-Pay approval ~97% at 2024 annual meeting, indicating broad support for design .
Investment Implications
- Alignment: Satisfied ownership guideline and significant unvested RSUs/PSUs promote retention and long-term focus; prohibitions on hedging/pledging reduce misalignment risk .
- Incentive levers: STI balanced across revenue, EBITDA, and operating cash flow; LTI emphasizes multi-year profitability, cash generation, and peer-relative TSR—supportive for cash conversion and margin expansion theses .
- Retention and turnover risk: Severance and retirement policies (continued vesting; meaningful cash severance; two-year non-compete) lessen near-term departure risk while preserving performance accountability via clawbacks .
- Trading signals: FY2025 vesting of 47,053 shares and ongoing RSU vesting cadence could create episodic selling pressure; insider trading policy mandates pre-clearance, reducing opportunistic timing risk .
- Performance context: FY2025 TSR underperformed while margins and cash flow improved; PSU outcomes (FY23–FY25) paid above target, reflecting stronger cash generation and relative TSR ranking—watch ongoing execution on EBITDA/CFO while monitoring TSR trajectory .