0001057379 false 0001057379 2024-09-16 2024-09-16

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): September 16, 2024

 

 

The Hackett Group, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Florida   333-48123   65-0750100

(State or other jurisdiction of

incorporation or organization)

  

(Commission

File Number)

  

(I.R.S. Employer

Identification No.)

 

1001 Brickell Bay Drive, Suite 3000

Miami, Florida

   33131
(Address of principal executive offices)   (Zip Code)

(305) 375-8005

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

  

Trading

Symbol(s)

  

Name of each exchange

on which registered

Common Stock, par value $.001 per share   HCKT   Nasdaq Stock Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

The Compensation Committee of the Board of Directors of The Hackett Group, Inc. (the “Company”) approved the one-time grant of performance-based restricted stock unit awards (the “Stock Price Awards”) to the Company’s named executive officers, among other employees, under the Company’s 1998 Stock Option and Incentive Plan (the “Plan”). The Stock Price Awards are designed to incentivize long-term outperformance of the Company’s stock price, aligning the executives’ interests with those of the Company’s stockholders while the Company undergoes a transformation to expand its generative artificial intelligence strategy. In connection with the Stock Price Awards, the annual equity incentive award opportunities for the named executive officers during the performance period of the Stock Price Awards will be reduced by 50% compared to the annual equity incentive award opportunities in the Company’s executive compensation program for 2024.

The Stock Price Awards are eligible to become earned based on achievement of three significant stock price hurdles over a performance period from the date of grant through December 31, 2028 and are conditioned upon satisfaction of time-based vesting conditions. The volume weighted average price per share of the Company’s common stock over any 20 consecutive trading days during the performance period must exceed the applicable stock price hurdle in order for the stock price hurdle to be considered achieved. Notwithstanding the date of achievement of the stock price hurdles during the performance period, the Stock Price Awards subject to the first, second and third stock price hurdles may not vest until the first, second and third anniversary of the grant date, respectively, which requires continued service through such date.

The following table illustrates the amounts of performance-based restricted stock units that can be earned based on achievement of the three stock price hurdles applicable to the Stock Price Awards, which hurdles were established by the Compensation Committee:

 

     % of Stock Price Awards Earned     Stock Price Hurdle      % Appreciation
from 20-day
Volume Weighted
Average Price of
$25.93 between
August 16, 2024
and September 13,
2024		  

Stock Price Award Hurdle #1

      33.33 %    $ 30.00        16 % 

Stock Price Award Hurdle #2

      Additional 33.33 %    $ 40.00        54 % 

Stock Price Award Hurdle #3

      Additional 33.34 %    $ 50.00        93 % 

The Compensation Committee approved the Stock Price Awards following a comprehensive review of the Company’s executive compensation program conducted with the Compensation Committee’s independent compensation consultant, taking into account the Company’s desire to pivot its capabilities

to support generative AI-related consulting services and solutions. The Company believes this transition will help it remain competitive and take advantage of the significant shareholder value creation Gen AI can provide. The Company expects this transition will require retraining or recruiting to develop Gen AI aided software delivery capabilities especially given the magnitude and speed at which this technology transition is happening. The Company has articulated its strategy and has launched its AI XPLR platform as its initial entry into the category with favorable market reaction. The Company expects that this initial effort will require great innovation and agility and strategic acquisitions, such as its recently announced acquisition, are part of that overall effort.

The Stock Price Awards are designed to further align the interests of the Company’s key executives with those of its stockholders, by incentivizing the stock performance outcomes and exposing executives more directly to the market price of the Company’s common stock, increasing executive stock ownership over time and promoting retention given their potential value. Based on the closing stock price of $25.60 and 27,651,921 shares outstanding on September 13, 2024, achieving the $50 stock price hurdle represents an approximately $675 million increase in the Company’s market capitalization.

Ted A. Fernandez, the Company’s Chairman and Chief Executive Officer, received a Stock Price Award in the amount of 786,885 performance-based restricted stock units, representing a grant date fair value of $20,144,256. David N. Dungan, the Company’s Vice Chairman and Chief Operating Officer, received a Stock Price Award in the amount of 413,115 performance-based restricted stock units, representing a grant date fair of $10,575,744. Robert A. Ramirez, the Company’s Executive Vice President, Finance and Chief Financial Officer, received a Stock Price Award in the amount of 72,000 performance-based restricted stock units, representing a grant date fair value of $1,843,200. The number of performance-based restricted stock units described above represents achievement of 100% of the stock price hurdles and such performance-based restricted stock units will be forfeited if the stock price hurdles are not achieved. If at the end of the performance period, the volume weighted average price per share of the Company’s common stock over the 20 consecutive trading days immediately prior to the end of the performance period falls between two stock price hurdles, a number of performance-based restricted stock units will vest based on interpolation between the applicable stock price hurdles. No extrapolation will occur above the third stock price hurdle.

If an executive’s employment is terminated due to: (i) death, (ii) “permanent and total disability” (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986), (iii) termination without “Cause” (as defined in the Plan), (iv) termination without Cause within twelve (12) months following a Change of Control (as defined in the Plan) or (v) a termination by the executive for “Good Reason” (as defined in the executive’s employment agreement), the Stock Price Awards will vest based upon the actual achievement of the stock price hurdles through the date of the termination.

As a result of the potential value of the Stock Price Awards, the Compensation Committee determined that the annual equity incentive award opportunities for which the named executive officers will be eligible during 2025-2028 will be reduced by 50%.

In addition to Messrs. Fernandez, Dungan and Ramirez, up to 10 other Company employees, are eligible to participate in this program. Employees who elect to participate in this program will have their annual equity incentive award opportunity reduced by 50% during 2025-2028. If all eligible participants participate, 1,879,350 performance-based restricted stock units will be issued.

The foregoing description of the Stock Price Awards does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the form of the Stock Price Awards award agreement, which is attached hereto as Exhibit 10.1, and is incorporated herein by reference.

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit

Number

   

Description

10.1    Form of Performance-Based Stock Price Restricted Stock Award.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    THE HACKETT GROUP, INC.
Date: September 16, 2024     By:  

/s/ Robert A. Ramirez

      Robert A. Ramirez
      Executive Vice President, Finance and Chief Financial Officer

Exhibit 10.1

 

LOGO

THE HACKETT GROUP, INC.

1998 STOCK OPTION AND INCENTIVE PLAN

RESTRICTED STOCK UNIT AGREEMENT

The Hackett Group, Inc., a Florida corporation (the “Company”), hereby grants restricted stock units relating to shares of its common stock, $.001 par value (“Stock”), to the individual named below as the Grantee, subject to the vesting conditions set forth in the attachment on Exhibit A. Additional terms and conditions of the grant are set forth in this cover sheet, in the attached agreement (the “Agreement”) and in The Hackett Group, Inc. 1998 Stock Option and Incentive Plan, as amended (the “Plan”).

Grant Date:  September  , 2024

Name of Grantee:           

Number of Restricted Stock Units

Granted:    

By signing this cover sheet, you agree to all of the terms and conditions described in this Agreement and in the Plan, a copy of which is available on the Human Resources page on our Corporate intranet at https://mindshare.thehackettgroup.com/portal/site/main/. You acknowledge that you have carefully reviewed the Plan and agree that the Plan will control in the event any provision of this Agreement should appear to be inconsistent with the terms of the Plan.

 

Grantee:  

 

  (Signature)
Company:    

 

  (Signature)
  Title:                    

Attachment

This is not a stock certificate or a negotiable instrument.

THE HACKETT GROUP, INC.

1998 STOCK OPTION AND INCENTIVE PLAN

RESTRICTED STOCK UNIT AGREEMENT

 

Restricted Stock Units:    This grant is an award of stock units in the number of units set forth on the cover sheet, subject to the vesting conditions described below (“Restricted Stock Units” or “RSUs”).
Transferability:    Your Restricted Stock Units may not be transferred, assigned, pledged or hypothecated, whether by operation of law or otherwise, nor may the Restricted Stock Units be made subject to execution, attachment or similar process.
Definitions:    Capitalized terms not defined in this Agreement are defined in the Plan, and have the meaning set forth in the Plan.
Vesting:    Vesting in your Restricted Stock Units is subject to both a performance-vesting condition and a time-vesting condition. Subject to the terms and conditions of this Agreement, the Restricted Stock Units shall vest, if at all, and no longer be subject to any restrictions hereunder subject to the satisfaction of the performance and service criteria set forth on Exhibit A.
Issuance of Stock Pursuant to Vested Units:   

The shares of Stock underlying your vested Restricted Stock Units (less any shares withheld to satisfy your withholding obligations) shall be issued within thirty (30) days of the applicable vesting date; provided, however, that issuance shall occur no later than March 15th of the year following the year in which vesting occurs.

 

The shares of Stock issued upon vesting of your Restricted Stock Units will be subject to any applicable lock-up or similar agreement to which you are subject and applicable securities laws.

 

Notwithstanding anything in this Agreement to the contrary, the Committee may determine that, in lieu of issuing shares of Stock underlying vested Restricted Stock Units, vested Restricted Stock Units may be paid out in cash in an amount per Restricted Stock Unit equal to the closing price per share of Stock on the Nasdaq Global Market on the date of settlement.

Recoupment:    The RSUs and any shares of Stock underlying your vested Restricted Stock Units shall be subject to claw-back or recoupment as permitted or mandated by applicable law, rules, regulations or any Company policy as enacted, adopted or modified from time to time.

 

2

Withholding Taxes:    You agree, as a condition of this grant, that you will make acceptable arrangements to pay any withholding or other taxes that may be due as a result of vesting in Restricted Stock Units or your acquisition of Stock under this grant. The Company shall have the right to deduct from payments of any kind otherwise due to you, any federal, state or local taxes of any kind required by law to be withheld in connection with the lapse of restrictions applicable to this award. Subject to the approval of the Company or Subsidiary, which approval may be withheld in the Company’s or Subsidiary’s sole discretion, in the event that the Company determines that any federal, state, local or foreign tax or withholding payment is required relating to this grant, you may elect to pay such tax obligations though: (i) electing to have such amounts withheld from other payments due to you from the Company or any Affiliate, or (ii) electing to have shares of Stock subject to the Restricted Stock Units granted pursuant to this Agreement withheld in an amount equal to the withholding or other taxes due. The shares of Stock so delivered or withheld shall have an aggregate Fair Market Value equal to such withholding obligations. The Fair Market Value of the shares of Stock used to satisfy such withholding obligation shall be determined by the Company or the Subsidiary as of the date that the amount of tax to be withheld is to be determined.
Retention Rights:    This Agreement does not constitute an employment agreement and nothing in the Plan or this Agreement shall modify the terms of your Service. This Agreement does not give you the right to be retained or employed by the Company (or any Affiliates) in any capacity.
Stockholder Rights:    You do not have any of the rights of a stockholder with respect to the Restricted Stock Units unless and until the shares of Stock relating to the Restricted Stock Units have been delivered to you.
Adjustments:    In the event of a stock split, reverse stock split, stock dividend, recapitalization, reorganization, liquidation, merger or a similar corporate event or distribution of stock or property affecting the stock of the Company, the number of Restricted Stock Units covered by this grant will be adjusted proportionately in order to preserve the potential benefits

 

3

   intended to be made available under the Plan and this Agreement (and rounded down to the nearest whole number) in accordance with the terms of the Plan.
Applicable Law:    This Agreement will be interpreted and enforced under the laws of the State of Florida, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.
Consent to Electronic Delivery:    The Company may choose to deliver certain materials relating to the Plan in electronic form. By accepting this grant, you agree that the Company may deliver the Plan prospectus and the Company’s annual report to you in an electronic format. If at any time you would prefer to receive paper copies of these documents, as you are entitled to receive, the Company would be pleased to provide copies. Please contact Jose Estevez-Lugo at 305-375-8005 to request paper copies of these documents.
Amendments:    Subject to all applicable laws, rules and regulations, the Committee shall have the power to amend the terms and conditions of your Restricted Stock Units including this Agreement and the Plan at any time; provided, however, that no amendment that would adversely alter your Restricted Stock Units may be made without your consent. Notwithstanding the foregoing, the Committee shall have broad authority to alter or amend this Agreement and the terms and conditions applicable to the RSUs, including by modifying the Share Price Hurdles, without your consent to the extent it deems necessary or desirable in its sole discretion (i) to comply with or take into account changes in, or rescissions or interpretations of, applicable tax laws, securities laws, employment laws, accounting rules or standards and other applicable laws, rules, regulations, guidance, ruling, judicial decision or legal requirement, (ii) to ensure that the RSUs are not subject to taxes, interest and penalties under Section 409A of the Code, (iii) to take into account unusual or nonrecurring events or market conditions, or (iv) to take into account significant acquisitions or dispositions of assets or other property by the Company. Any amendment, modification or termination shall, upon adoption, become and be binding on all persons affected thereby without requirement for consent or other action with respect thereto by any such person. The Committee shall provide you with written notice of any such amendment, modification or termination as promptly as practicable after

 

4

   the adoption thereof. The foregoing shall not restrict the ability of you and the Company by mutual consent to alter or amend the terms of the RSUs in any manner that is consistent with the Plan and approved by the Committee.
Section 409A:   

The RSUs are intended to constitute “short-term deferrals” for purposes of Section 409A of the Code and the regulations and guidance promulgated thereunder (“Section 409A”). If any provision of the Plan or this Agreement would, in the reasonable good faith judgment of the Committee, result or likely result in the imposition on you, a beneficiary or any other person of a penalty tax under Section 409A, the Committee may modify the terms of the Plan or this Agreement, without your consent, the consent of your beneficiary or such other person, in the manner that the Committee may reasonably and in good faith determine to be necessary or advisable to avoid the imposition of such penalty tax. This does not create an obligation on the part of the Company to modify the Plan or this Agreement and does not guarantee that the RSUs will not be subject to taxes, interest and penalties under Section 409A.

 

Notwithstanding the foregoing, if (i) you are a “specified employee” (within the meaning of Section 409A of the Code taking into account such elections as the Board may choose to make from time to time and as are binding on all of the Company’s deferred compensation plans), and (ii) the distribution event is a “separation from service” (within the meaning of Section 409A of the Code), other than death, then no amount shall be distributed to you before the date that is 6 months and one day after the date of your separation from service (or, if earlier, the date of your death) and any amounts that would have been distributed during the 6 months after your separation from service (or prior to death) shall be accumulated and distributed on the date that is 6 months and one day after the date of your separation from service (or, if earlier, upon the date of your death).

The Plan:    The text of the Plan is incorporated in this Agreement by reference. This Agreement, the Plan, and an applicable Services agreement with the Company, if any, constitute the entire understanding between you and the Company regarding this grant of Restricted Stock Units. Any prior agreements, commitments or negotiations concerning this grant are superseded. The Plan will control in the event any provision of this Agreement should appear to be inconsistent with the terms of the Plan.

By signing the cover sheet of this Agreement, you agree to all of the terms and conditions described above and in the Plan.

 

5

Exhibit A

The number of Restricted Stock Units that will satisfy the performance-vesting condition under this Agreement (the “Earned RSUs”) shall be determined based on the degree to which the specified Share Price Hurdles below are satisfied during the period commencing on the Grant Date and ending on December 31, 2028 (the “Performance Period”).

First Share Price Hurdle      $30.00

Number of Restricted Stock Units that become Earned RSUs #   

Second Share Price Hurdle     $40.00

Number of Restricted Stock Units that become Earned RSUs #   

Third Share Price Hurdle       $50.00

Number of Restricted Stock Units that become Earned RSUs #   

An applicable Share Price Hurdle will be considered to be met and the applicable number of Restricted Stock Units will be deemed to be Earned RSUs once the volume weighted average price per share of Stock on the Nasdaq Global Market, as reported by Bloomberg (or, in the event Bloomberg does not report such information, such third-party service as chosen by the Company), over any twenty (20) consecutive trading days during the Performance Period equals or exceeds the applicable Share Price Hurdle. If a Share Price Hurdle is met, such applicable number of Restricted Stock Units shall be Earned RSUs and shall not cease to be Earned RSUs despite future changes in share price of Stock.

At the end of the Performance Period, if the volume weighted average price per share of Stock on the Nasdaq Global Market, as reported by Bloomberg (or, in the event Bloomberg does not report such information, such third-party service as chosen by the Company), over the twenty (20) consecutive trading days immediately prior to the end of the Performance Period falls between two Share Price Hurdles, an additional number of Restricted Stock Units will be deemed to be Earned RSUs based on interpolation between the applicable Share Price Hurdles, notwithstanding that the higher Share Price Hurdle was not met (“Additional Earned RSUs”).

Earned RSUs from the First Share Price Hurdle, if any, shall be fully vested following your continued Service through the one year anniversary of the Grant Date. Earned RSUs from the Second Share Price Hurdle, if any, shall be fully vested following your continued Service through the two year anniversary of the Grant Date. Earned RSUs from the Third Share Price Hurdle, if any, shall be fully vested following your continued Service through the three year anniversary of the Grant Date. Additional Earned RSUs, if any, shall be fully vested following your continued Service through the end of the Performance Period.

“Service” means service by you as an employee of the Company or an Affiliate. Following your termination of Service, no RSUs may become Earned RSUs. Notwithstanding anything in this Agreement to the contrary, in the event of your termination of Service due to: (i) death, (ii) “permanent and total disability” (within the meaning of Section 22(e)(3) of the Code),

 

6

(iii) termination without Cause, (iv) termination without Cause within twelve (12) months following a Change of Control or (v) in the event that the Grantee has entered into an employment agreement with the Company, a termination by the Grantee for “Good Reason” (as defined in such employment agreement), you shall fully vest in any Earned RSUs as of the date of your termination of Service.

 

7

v3.24.3
Document and Entity Information
Sep. 16, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Sep. 16, 2024
Entity Registrant Name Hackett Group, Inc.
Entity Incorporation State Country Code FL
Entity File Number 333-48123
Entity Tax Identification Number 65-0750100
Entity Address Address Line 1 1001 Brickell Bay Drive
Entity Address Address Line 2 Suite 3000
Entity Address City Or Town Miami
Entity Address State Or Province FL
Entity Address Postal Zip Code 33131
City Area Code 305
Local Phone Number 375-8005
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Security 12b Title Common Stock, par value $.001 per share
Trading Symbol HCKT
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Entity Central Index Key 0001057379
Amendment Flag false
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