DEF: Hackett Group Proposes Stock Plan Amendment, Seeks Shareholder Approval

The Hackett Group is seeking shareholder approval for an amendment to its 1998 Stock Option and Incentive Plan to increase the share sublimit and total authorized shares by 1,950,000.

Summary

• The Hackett Group is asking shareholders to approve an amendment to the company's 1998 Stock Option and Incentive Plan.
• The proposed amendment includes increasing the sublimit for restricted stock and restricted stock unit issuances by 1,950,000 shares.
• It also seeks to increase the total number of shares authorized for issuance under the Plan by 1,950,000 shares.
• The company believes the equity component of its compensation programs is crucial for attracting and retaining key employees.
• The Board believes that the awards currently subject to the limit have and, if the amendment is approved by shareholders, will continue to be a successful element of the Company's overall compensation strategy and that the approval of the amendment is in the best interest of the Company and its shareholders.
• If the amendment is not approved, this would create uncertainty with regard to the Company's ability to continue the current compensation programs.
• The company's primary competitors in the strategic consulting and executive advisory sector have compensation programs that are focused on cash compensation and are further supported with meaningful retirement benefits.
• The Company does not provide any retirement benefits to its executives.
• The company's programs provide for a combination of cash and equity compensation that allows it to compete for high-impact talent.

Sentiment

Score: 7

Explanation: The document is primarily informational, outlining the details of the proposed stock plan amendment and related governance matters. The sentiment is neutral to slightly positive, reflecting the company's efforts to maintain competitive compensation practices and align executive interests with shareholder value.

Positives

• The proposed amendment will allow the company to continue its current compensation programs, which are considered competitive.
• Equity compensation aligns the interests of executives with those of shareholders.
• The company believes that the awards currently subject to the limit have and, if the amendment is approved by shareholders, will continue to be a successful element of the Company's overall compensation strategy and that the approval of the amendment is in the best interest of the Company and its shareholders.
• The company's programs provide for a combination of cash and equity compensation that allows it to compete for high-impact talent.

Negatives

• If the amendment is not approved, the company may need to create an alternative compensation program, potentially involving cash settlements, which could reduce retention value and shareholder alignment.
• The company's primary competitors in the strategic consulting and executive advisory sector have compensation programs that are focused on cash compensation and are further supported with meaningful retirement benefits.
• The Company does not provide any retirement benefits to its executives.

Risks

• Failure to obtain shareholder approval for the amendment could create uncertainty regarding the company's ability to maintain competitive compensation programs.
• The company may need to create an alternative compensation program, potentially involving cash settlements, which could reduce retention value and shareholder alignment.

Future Outlook

The company aims to fund its current compensation programs for 2024, 2025, and 2026, including potential grants to senior new hires and leaders hired in connection with acquisitions.

Management Comments

• Ted A. Fernandez, Chairman and Chief Executive Officer, cordially invites shareholders to attend the 2025 Annual Meeting.
• The Board believes that the awards currently subject to the limit have and, if the amendment is approved by shareholders, will continue to be a successful element of the Company's overall compensation strategy and that the approval of the amendment is in the best interest of the Company and its shareholders.

Industry Context

The document mentions that the company's primary competitors in the strategic consulting and executive advisory sector have compensation programs that are focused on cash compensation and are further supported with meaningful retirement benefits, which Hackett does not offer.

Comparison to Industry Standards

• The company's compensation programs are designed to be competitive with those of other strategic consulting and business advisory organizations and professional services firms.
• The company observes what it believes to be its directly comparative pay market, which is other strategic consulting and business advisory organizations and professional services firms which are mostly of significantly greater size.
• The company's direct competitor group consists of primarily private and much larger consulting groups such as McKinsey, Bain, BCG and the consulting arms of PwC, Deloitte, E&Y and KPMG.

Related Party Transactions

• On February 23, 2024, the Company repurchased (i) 4,744 shares of its common stock from Maria Bofill, a member of the Board;(ii) 6,570 shares of its common stock from Richard Hamlin, a member of the Board; (iii) 25,473 shares of its common stock from John Harris, a member of the Board; (iv) 3,282 shares of its common stock from Robert Rivero, a member of the Board; and (v) 3,282 shares of its common stock from Alan T.G. Wix, a member of the Board.
• These repurchases were made at a price per share of $24.34, which was the closing price of a share of the Company's common stock on the Nasdaq on February 23, 2024.
• On February 19, 2025, the Company repurchased (i) 40,000 shares of its common stock from Robert Ramirez, Chief Financial Officer; (ii) 3,282 shares of its common stock from Maria Bofill, a member of the Board; (iii) 3,077 shares of its common stock from Robert Rivero, a member of the Board; (iv) 3,077 shares of its common stock from Alan Wix, a member of the Board; (v) 923 shares of its common stock from John Harris, a member of the Board.
• These repurchases were made at a price per share of $30.78, which was the closing price of a share of the Company's common stock on the Nasdaq on February 19, 2025.

Stakeholder Impact

• Shareholders will be asked to vote on the proposed amendment to the stock option plan.
• The outcome of the vote will impact the company's ability to attract and retain key employees, which could affect the company's performance and shareholder value.
• The document also provides information on executive compensation, which is of interest to shareholders.

Next Steps

• Shareholders are asked to vote on the election of directors.
• Shareholders are asked to vote on the approval of an amendment to the company's 1998 Stock Option and Incentive Plan.
• Shareholders are asked to vote on an advisory vote on executive compensation.
• Shareholders are asked to vote on the ratification of the appointment of RSM US LLP as the company's independent registered public accounting firm.

Key Dates

Keywords

Stock Option Plan, Equity Compensation, Shareholder Approval, Restricted Stock Units, Executive Compensation, Hackett Group