Padraig McDonnell
AGILENT TECHNOLOGIESAbout Padraig McDonnell
Padraig McDonnell (age 53) is Agilent’s President and Chief Executive Officer (CEO) and a director, appointed CEO on May 1, 2024 after serving as COO and CEO‑elect from Feb 20, 2024; he has 26+ years with Agilent/Hewlett‑Packard across commercial and operating roles including CCO and President of Agilent CrossLab Group and division/general manager roles in EMEAI and Chemistries & Supplies . FY2024 performance context: revenue declined 4.4% to $6.5B, operating margin rose to 22.9%, GAAP EPS increased 5.7% to $4.43, and TSR was +26.9% (S&P 500 TSR +38.0%) . Agilent emphasizes pay-for-performance: ~92% of Mr. McDonnell’s FY2024 target compensation was at‑risk; short‑term corporate bonus funded at 57% and FY22–FY24 PSU payouts were 56% (TSR) and 87% (EPS), aligning realized pay with results .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Agilent Technologies | President & CEO | May 2024–present | Leads strategy and “Transformation Initiatives” to drive growth and efficiency; oversaw 2024 cost actions and supported M&A pipeline (e.g., BIOVECTRA) in transition year . |
| Agilent Technologies | SVP, COO and CEO‑elect | Feb–Apr 2024 | Transition readiness; incremental LTI and cash comp set to market for COO role . |
| Agilent Technologies | CCO & President, Agilent CrossLab Group | Nov 2021–Feb 2024 | Drove CrossLab services growth/retention and recurring revenue model development . |
| Agilent Technologies | SVP & President, Agilent CrossLab Group | May 2020–Nov 2021 | Segment leadership for services portfolio; operational execution . |
| Agilent Technologies | VP & GM, Chemistries & Supplies Division | Nov 2016–Apr 2020 | Led consumables growth and margin management . |
| Agilent/Hewlett‑Packard | VP & GM, EMEAI Lab Solutions Sales; various roles | Prior to 2016 | Long-tenured commercial and operating leadership across geographies . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| — | — | — | No other public company directorships disclosed . |
Board Governance and Service
- Director since May 2024; member of the Executive Committee (with Non‑Executive Chair as Chair) .
- Independence: not independent due to CEO role; Board has an independent, non‑executive Chair and majority independent directors; regular executive sessions without management .
- Attendance: Board met seven times in FY2024; each director attended ≥75% of Board/committee meetings .
- Directors employed by the company receive no additional Board compensation; thus, Mr. McDonnell receives no director fees .
Fixed Compensation
| Item | FY2022 | FY2023 | FY2024 |
|---|---|---|---|
| Base Salary (SCT, $) | 571,212 | 606,231 | 869,962 |
| Year‑end Base Salary Rate ($) | — | — | 1,075,000 (as of 10/31/2024) |
| Target Bonus (% of Salary) | — | — | 125% (CEO) |
| Actual Bonus Paid (Non‑Equity Incentive Plan Compensation, $) | 652,997 | 316,363 | 669,309 |
| All Other Compensation ($) | 70,667 | 137,084 | 21,314 |
Notes:
- CEO compensation positioning set at ~$9.9M total target for FY2024 (below prior CEO), initially around the 25th percentile of peers with multi‑year progression based on performance and strategy .
Performance Compensation
Annual Incentive (PFR) – Design, Metrics, and FY2024 Outcomes
- Design: Financial goals (Adjusted Operating Margin % and Revenue) drive 75%–100% of target; Key Business Initiatives (KBIs) drive up to 25% (max 200%), with straight‑line profiles; corporate matrix used for company‑level funding .
- FY2024 Company Results and Funding:
- Adjusted Operating Margin: 26.5% vs 27.6% target (96% attainment) .
- Revenue: $6,432M vs $6,857M target (94% attainment) .
- Company payout from matrix: 56.6% .
- KBIs assigned to CEO included: Free Cash Flow (payout 87.3%) and Productivity Improvement (payout 0.0%) .
| Metric Component | Weight | Threshold | Target | Max | Result/Attainment | Payout |
|---|---|---|---|---|---|---|
| Company Financials (Adj. OM% x Revenue) | 75%–100% | OM% 24.0% | OM% 27.6% | OM% 29.5% | OM% 26.5% (96%), Revenue $6,432M (94%) | 56.6% |
| KBI: Free Cash Flow | up to 25% | 85% of plan | Achieve plan | 115% of plan | Achieved 87.3% payout | 87.3% |
| KBI: Productivity Improvement | up to 25% | 102% plan | Achieve plan | 98% plan | 0.0% payout | 0.0% |
Long‑Term Incentives (LTI) – Structure and FY2024 Grants
- Mix and Vesting: 60% PSUs (30% TSR vs S&P 500 Health Care/Materials peers; 30% annual Adjusted EPS), 20% stock options, 20% RSUs; PSUs vest at 3 years, options/RSUs 25% per year over 4 years; 1‑year post‑vest holding on PSUs/RSUs .
- CEO FY2024 target LTI value: $7.5M allocated as shown (with incremental grants upon promotions to COO and CEO) .
| FY2024 CEO LTI | Value ($) | # Shares/Options | Vesting/Metric |
|---|---|---|---|
| PSUs – Relative TSR | 2,250,000 | 12,540 | 3‑yr, vs S&P 500 Health Care & Materials; 25th/50th/75th pct = 25%/100%/200% payout |
| PSUs – Adjusted EPS (annual goals within 3‑yr cycle) | 2,250,000 | 18,376 | 3‑yr; FY24 EPS actual $5.25 vs $5.55 target (42% attainment for FY24 component) |
| Stock Options | 1,500,000 | 34,849 | 25% per year over 4 years |
| RSUs | 1,500,000 | 12,356 | 25% per year over 4 years; 1‑yr holding |
| Total | 7,500,000 | — | — |
PSU outcomes (FY22–FY24 cycle certified Nov 2024):
- Relative TSR payout: 56% (Agilent at ~35th percentile), CEO earned 1,474 shares on this tranche .
- Adjusted EPS PSU payout: 87% average of FY22/FY23/FY24 yearly results; CEO earned 3,031 shares on this tranche .
Equity Ownership & Alignment
| Ownership Detail (as of Oct 31, 2024 unless noted) | Amount |
|---|---|
| Beneficial Ownership (Jan 23, 2025) – Shares | 12,465; less than 1% of outstanding |
| Options – Exercisable / Unexercisable (#) | 16,175 / 49,422 |
| RSUs – Not Vested (#) | 16,652 |
| PSUs – Unearned/Not Vested (#) | 71,820 |
| Hedging/Pledging | Prohibited for directors/officers |
| 10b5‑1 Plans | Permitted under policy for diversification and option exercises |
| CEO Stock Ownership Guideline | 6x base salary; executives counted on track/meeting guidelines |
| Post‑Vest Holding | One‑year post‑vest hold on PSUs and executive RSUs |
Insider selling pressure mitigants: post‑vest holding requirement and strict anti‑hedging/pledging policies; executives may use Rule 10b5‑1 plans to orderly sell for diversification .
Employment Terms
- CEO Appointment and Base/Bonus Progression: Salary increased from $640k to $900k (COO 2/20/24), then to $1,075,000 upon becoming CEO (5/1/24); target bonus increased to 125% at CEO; incremental LTI grants of $2.0M (COO) and $3.3M (CEO) in FY2024 .
- Change‑of‑Control (CoC): Double‑trigger; CEO entitled to 3x (salary + target bonus), $80k for medical premiums, full vesting of non‑performance equity, and prorated bonus (best‑net cutback; no excise tax gross‑ups) .
- Estimated CEO CoC termination benefits (as of 10/31/2024): $9.65M total ($7.26M cash, $80k benefits, $2.31M equity acceleration) .
- LTPP payout on CoC is greater of target or accrued results; pro‑rata if within first 12 months of cycle .
- Retirement/Separation Equity Treatment: Post‑2018 awards continue vesting after retirement only if age ≥60 and age+service ≥75 (no automatic acceleration); as of 10/31/24, CEO had not met eligibility .
- Clawbacks: Dodd‑Frank‑compliant clawback adopted Oct 2, 2023 plus broader recoupment policy for restatements and misconduct; potential reimbursement, cancellation, disgorgement .
- Severance Outside CoC: Companywide Workforce Management Program for restructuring; NEOs not reported to have received payments under it .
- Perquisites/Benefits: Limited perqs (e.g., company drivers to airport), broad‑based benefits; standard 401(k) matching; CEO received $21,314 of “All other compensation” in FY2024 .
- Deferred Compensation: Eligible and participated; FY2024 exec contributions $11,540; company contributions $3,231; year‑end balance $258,627 .
Performance & Track Record
| Measure | FY2023 | FY2024 | Comment |
|---|---|---|---|
| Revenue (Actual) | $6.8B | $6.5B | −4.4% YoY; market softness post‑COVID demand spike |
| Operating Margin (GAAP) | 19.8% | 22.9% | +310 bps YoY |
| Diluted EPS (GAAP) | $4.19 | $4.43 | +5.7% YoY |
| TSR (incl. dividends) | $102.67→$130.31 (+26.9%) | — | Positive TSR in tough macro year |
Notable execution items during leadership transition: instituted cost actions and “Transformation Initiatives”; supported active M&A evaluation including BIOVECTRA announcement; maintained investor outreach; Say‑on‑Pay support at 89% .
Compensation Structure Analysis
- High at‑risk mix: ~92% of CEO target pay at‑risk; balanced between annual and multi‑year performance (EPS, TSR) .
- Annual PFR aligned to revenue and operating margin with matrix rigor; 2024 under‑target performance drove below‑target cash payout .
- LTPP design ties to 3‑yr TSR vs broad sector indices and annual Adjusted EPS goals set at guidance mid‑point/high‑end; FY22–FY24 TSR/EPS payouts of 56%/87% reflect performance variability and linkage to results .
- Governance controls: double‑trigger CoC with no tax gross‑ups; robust clawbacks; anti‑hedging/pledging; one‑year post‑vest holding; director/NEO stock ownership guidelines (CEO 6x salary) .
- Benchmarking: peer group anchored to S&P 500 Health Care (size‑screened) with targeted market median over time; FY2024 CEO target set initially around 25th percentile to allow progression .
Equity Ownership & Alignment Details
| Component | Count/Policy | Notes |
|---|---|---|
| Beneficially owned shares | 12,465 | <1% of outstanding |
| Options outstanding | 65,597 total; 16,175 exercisable / 49,422 unexercisable | Exercise prices span $109.86–$161.39 (older) and $123.99/$131.40/$139.06 (FY2024 grants) |
| Unvested RSUs | 16,652 | 25% per year vest; 1‑year post‑vest holding |
| Unearned PSUs | 71,820 | Subject to FY23–FY25 and FY24–FY26 cycles; TSR/EPS metrics |
| Policies | No hedging/pledging; 10b5‑1 allowed | Reduces alignment risks; enables orderly selling |
| Ownership guideline | CEO 6x salary; on track/meeting | Annual compliance review |
Say‑on‑Pay & Shareholder Feedback
- Say‑on‑Pay approval: 89% at 2024 annual meeting .
- Ongoing engagement: outreach to top holders; responsiveness to governance feedback (e.g., proposal to remove supermajority voting in 2025) .
Risk Indicators & Red Flags (as disclosed)
- No excise tax gross‑ups; best‑net cutback for CoC .
- Robust clawbacks (Dodd‑Frank compliant and broader) .
- Anti‑hedging/pledging policy; post‑vest holding requirement .
- Related‑party transactions: none material; routine oversight per policy .
- Section 16 compliance: one executive reported late Form 4 (not CEO) .
Investment Implications
- Alignment: High at‑risk mix, rigorous PSU metrics, no gross‑ups, holding requirements and anti‑pledging strongly align CEO incentives with long‑term TSR and EPS growth .
- Near‑term selling pressure: One‑year post‑vest holding on PSUs/RSUs and anti‑pledging reduce forced selling; however, meaningful unvested equity and multiple recent grants create ongoing vesting supply to monitor, typically via 10b5‑1 plans .
- Retention: Competitive CEO package initially below peer median with multi‑year progression plus market‑standard double‑trigger CoC at 3x supports retention during strategy execution and M&A optionality .
- Execution risk: FY2024 under‑target revenue/OM and sub‑median TSR PSU outcome (56%) highlight macro sensitivity; CEO’s long operating tenure and transformation agenda aim to improve operating leverage and EPS growth, with payouts tightly linked to those outcomes (EPS PSU average 87% FY22–FY24) .
- Governance: Independent Chair, majority‑independent Board, strong shareholder responsiveness (supermajority removal on ballot) are positives; CEO is not Board Chair, mitigating dual‑role concerns .