Dan L. Batrack
TETRA TECHAbout Dan L. Batrack
Dan L. Batrack (age 66) is Chairman and Chief Executive Officer of Tetra Tech, serving as CEO and director since 2005 and Chairman since 2008; he joined the company in 1980 and previously served as President (2008–2019) and COO (2004–2005). He holds a BA in Business Administration from the University of Washington . Execution under his tenure delivered record FY2024 metrics: revenue $5.199B (+15% YoY), operating income $501M (+40% YoY), EPS $1.23 (+21%), and backlog $5.376B (+12%) (post 5-for-1 split completed Sept 2024) . Total shareholder return (TSR) outperformed peers, with 1-year TSR of 53% and 3-year TSR of 55% .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Tetra Tech | Chairman & CEO | 2008–present (Chairman); 2005–present (CEO) | Set strategy to “Leading with Science,” scaling high-end consulting in water/environment; led integration of acquisitions and global programs . |
| Tetra Tech | President | 2008–2019 | Oversaw operations during growth and shift to higher-margin services . |
| Tetra Tech | Chief Operating Officer | 2004–2005 | Operational leadership preceding CEO transition . |
| Tetra Tech | Various technical/management roles | 1980–2004 | Built domain expertise and client relationships across Arctic, South America, Middle East, U.S. . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| — | — | — | No other current public company directorships listed for Batrack in the 2025 proxy . |
Fixed Compensation
- 2024 base salary set at $1,225,000; CEO base increased ~2.1% vs prior year as part of November 2023 adjustments .
- Target annual bonus opportunity: 150% of base salary .
- Perquisites (2024): 401(k) contribution $18,300; health/welfare $15,651; auto allowance $10,800; memberships $19,788; financial/tax planning $4,000 .
Multi-year compensation (reported)
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Salary ($) | 1,204,327 | 1,196,154 | 1,220,673 |
| Stock Awards ($) | 6,281,608 | 6,859,003 | 7,985,017 |
| Non-Equity Incentive Plan Comp ($) | 2,783,549 | 3,767,040 | 3,286,112 |
| All Other Comp ($) | 62,413 | 63,321 | 68,539 |
| Total ($) | 10,331,897 | 11,885,517 | 12,560,342 |
Performance Compensation
Annual Incentive Plan (AIP) design and FY2024 outcome
- Metrics and weights: Revenue (20%), Operating Income (40%), Cash Flow from Operations (20%), Backlog (20%); payouts 0–200% of target with growth-factor rigor adjustment .
- Corporate performance factor (CPF): 1.4903 (post growth-factor) for corporate metrics; CEO individual performance modifier: 1.20 .
- CEO AIP payout: Base $1,225,000; Target % 150%; CPF 1.4903; Individual Mod 1.20; AIP award $3,286,112 .
FY2024 AIP metric results (Corporate)
| Metric | Weight | Target FY2024 ($000) | Actual FY2024 ($000) | Actual vs Target (%) | Preliminary factor (0–2.0) | Growth factor | Final factor (0–2.0) |
|---|---|---|---|---|---|---|---|
| Revenue | 20% | 4,975,000 | 5,198,724 | 104.50 | 1.300 | 1.1 | 1.430 |
| Operating Income | 40% | 470,000 | 510,498 | 108.62 | 1.345 | 1.1 | 1.479 |
| Cash Flow | 20% | 300,000 | 358,724 | 119.57 | 1.783 | 0.9 | 1.605 |
| Backlog | 20% | 5,030,000 | 5,376,056 | 106.88 | 1.459 | 1.0 | 1.459 |
| CPF (weighted avg) | — | — | — | — | 1.446 | — | 1.4903 |
Long-Term Incentives (LTI) – design and FY2024 grants
- Mix: 60% PSUs (3-year cliff vesting), 40% RSUs (time-based, 25% per year) .
- PSU metrics and vesting: 50% based on adjusted EPS growth; 50% on relative TSR vs industry peer group and S&P 1000; vesting 0–200% .
- FY2024 CEO grant: PSUs 127,520 target shares (grant-date fair value $5,191,084); RSUs 85,015 (grant-date fair value $2,793,933); total LTI grant-date fair value $7,985,017 .
PSU performance curves (disclosed)
| Metric | Threshold | Target | Max |
|---|---|---|---|
| EPS growth (vesting %) | <2% → 0% | 9% → 100% | ≥16% → 200% |
| Relative TSR (percentile → vesting %) | <25th → 0% | 50th → 100% | ≥75th → 200% |
Vesting cadence and potential selling pressure
- RSUs vest 25% annually beginning Nov 30, 2025 for the Nov 21, 2023 grant (subject to continued service) .
- PSUs are cliff-vested at the end of a 3-year performance period based on achieved EPS/TSR, creating “lumpy” vesting events rather than steady selling pressure .
Equity Ownership & Alignment
Beneficial ownership (as of Jan 2, 2025)
| Holder | Shares Beneficially Owned | % Outstanding |
|---|---|---|
| Dan L. Batrack | 225,867 | <1% (asterisked in table) |
Unvested equity (as of FYE 2024; market value uses $46.40 close on Sept 27, 2024)
| Type | Tranche description | Shares/Units | Market value ($) |
|---|---|---|---|
| RSUs (time-based) | Various prior grants (16,390; 28,060; 57,040) | 101,490 | 4,709,144 |
| RSUs (time-based) | FY2024 grant (11/21/23): 85,015 | 85,015 | 3,944,696 |
| PSUs (performance-based; unearned) | FY2022 grant: 114,085 target | 114,085 | 5,293,544 |
| PSUs (performance-based; unearned) | FY2023 grant: 84,185 target | 84,185 | 3,906,184 |
| PSUs (performance-based; unearned) | FY2024 grant: 127,520 target | 127,520 | 5,916,928 |
| Totals | — | 325,790 PSUs; 186,505 RSUs | 15,116,656 PSUs; 8,653,832 RSUs |
Ownership guidelines, hedging/pledging, retention
- CEO must hold stock worth ≥6x base salary; all executives and directors were in compliance at FYE2024 .
- Hedging and pledging of company stock are prohibited; employees/directors may not short, trade derivatives, hedge, or pledge shares .
- Until guideline compliance, executives must retain at least 75% of net “gain shares” from vests/exercises .
Deferred Compensation (DCP)
- CEO deferred compensation account balance $32,175,415 as of FYE2024, including $28,472,896 representing Tetra Tech stock units; 2024 earnings included $9,814,558 of stock unit appreciation; CEO contributed $99,410 in 2024 .
Employment Terms
- No employment agreement; CEO employed at-will .
- Change-in-control (CIC) Severance Plan (double trigger): upon qualifying termination within two years post-CIC (or 90 days pre-CIC for terminations without cause), CEO receives lump-sum cash equal to 2.0x (base salary + target bonus), prorated current-year target bonus, unpaid prior-year bonus, and 102% of COBRA-equivalent medical benefits for 24 months; equity options/RSUs vest in full; PSUs vest based on actual performance; no automatic single-trigger vesting .
- Restrictive covenants for CIC severance eligibility include confidentiality and non-solicitation for 24 months for the CEO .
- No excise tax gross-up; “best net” cutback if Section 4999 excise tax would apply .
Hypothetical CIC benefits (assumed as of Sept 27, 2024)
| Component | Amount ($) |
|---|---|
| Severance (cash) | 5,390,000 |
| Health benefits (102% of premiums) | 31,296 |
| Accelerated PSUs (target, at $46.40) | 15,116,656 |
| Accelerated RSUs (at $46.40) | 8,653,832 |
| Total | 29,191,784 |
Clawback
- Dodd-Frank compliant recoupment policy applies to current/former executive officers if company must restate financials; recovery of incentive comp tied to financial reporting measures .
Board Governance (Batrack as Director)
- Board service and independence: Director since 2005; not independent as sitting CEO .
- Board leadership: Combined Chairman/CEO structure with a rotating independent Presiding Director (Kirsten M. Volpi elected July 2024) empowered to lead executive sessions, liaise with CEO, and interface with shareholders .
- Committees: All three standing committees (Audit, Compensation, Nominating & Corporate Governance) comprised solely of independent directors; Batrack is not a committee member .
- Meetings and executive sessions: Board held 6 meetings in FY2024; all incumbents attended ≥75%; independent directors meet in executive session after each regular Board meeting; committee executive sessions scheduled regularly .
- Director pay: CEO receives no additional compensation for director service .
Dual-role implications: While CEO/Chairman can raise independence concerns, Tetra Tech mitigates with an empowered Presiding Director, independent committees, majority independent board, annual CEO evaluation in executive session, and robust governance policies (e.g., proxy access, majority voting, term limits) .
Compensation Structure Analysis
- High at-risk, equity-heavy design: 88% of CEO target TDC at risk; 70% equity-based, emphasizing long-term alignment .
- Rigorous AIP with growth-factor: Corporate factor 1.4903 reflects overachievement versus ambitious targets and growth-factor adjustments; individual modifier used for extraordinary contributions (CEO +20%) .
- LTI shifts toward PSUs/RSUs (no new options): 60% PSUs with EPS and relative TSR metrics discourage low-quality growth; RSUs provide retention; no option repricings permitted .
- No employment contracts; double-trigger CIC and no tax gross-ups align with shareholder-friendly practice .
Compensation & Governance Context
- Say-on-pay: 93% approval at 2024 Annual Meeting; sustained investor engagement program with top holders .
- Compensation peer group: AECOM; Booz Allen Hamilton; CACI; Clarivate; Dycom; FTI Consulting; ICF; KBR; Leidos; Maximus; Parsons; SAIC; Stantec; Verisk .
- TSR performance benchmarking: PSU TSR peer group of 16 industry names plus S&P 1000 for market-relative vesting .
- Related party transactions: None in FY2024 .
Risk Indicators & Red Flags
- Hedging/pledging prohibited; no gross-ups; no option repricing; double-trigger equity vesting only—mitigates governance and compensation risk .
- Clawback policy in place; strong stock ownership guidelines with 75% retention of gain shares until compliance—aligns incentives and curbs near-term selling .
- No related-party transactions disclosed in FY2024 .
Investment Implications
- Alignment: High proportion of performance-conditioned equity (EPS growth and relative TSR) and robust AIP metrics tied to revenue, operating income, cash flow, and backlog support pay-for-performance and sustained value creation .
- Supply/demand for shares: RSU time-vesting (25% annually) creates predictable vesting, while PSU cliff schedules concentrate settlement events; retention and ownership guidelines requiring 75% gain-share retention until compliance dampen routine selling pressure .
- M&A optionality: CEO’s CIC package (~$29.2M under SEC assumptions) is sizable but double-trigger with performance-based PSU treatment; not likely to unduly incentivize a sale, yet material for transaction modeling .
- Governance checks on dual role: Independent Presiding Director and fully independent committees offset CEO/Chairman combination, with strong say-on-pay support (93%) reducing governance overhang .
Appendix: Additional Reference Tables
FY2024 LTI award detail (CEO)
| Instrument | # Granted | Grant date | Fair value ($) |
|---|---|---|---|
| PSUs (target) | 127,520 | Nov 21, 2023 | 5,191,084 |
| RSUs | 85,015 | Nov 21, 2023 | 2,793,933 |
| Total | — | — | 7,985,017 |
FY2024 AIP award math (CEO)
| Base ($) | Target % of base | CPF | Individual modifier | AIP award ($) |
|---|---|---|---|---|
| 1,225,000 | 150% | 1.4903 | 1.20 | 3,286,112 |