Neil MacDonald

About Neil MacDonald

Neil B. MacDonald is Executive Vice President and General Manager of Server at HPE; as of February 1, 2024 his remit expanded to lead both Compute and HPC & AI, reporting to the CEO. An HPE veteran of 28+ years, he previously worked at the Edinburgh Parallel Computing Centre and holds a BSc in Artificial Intelligence with Computer Science and a PhD in Computer Science from the University of Edinburgh, plus an MBA from San Jose State University . In fiscal 2024, HPE delivered $30.1B in net revenue, GAAP diluted EPS of $1.93, non-GAAP diluted EPS of $1.99, $4.3B cash flow from operations, $2.3B free cash flow, and ARR of $1.9B; management described strong execution and improving AI-driven demand . MacDonald’s MBO evaluation cited industry-leading Server profitability, strengthening Compute share, and growth in HPC & AI orders as he advanced HPE’s integrated AI strategy .

Past Roles

External Roles

Fixed Compensation

Multi-year compensation (USD):

Notes:

• Base salary increased from $550,000 to $600,000 for FY24 to reflect proficiency and market alignment .

Performance Compensation

Annual incentive (PfR) design and FY24 outcome:

• FY24 segment metrics for MacDonald: business segment revenue, business segment operating profit, services orders, and AI hardware orders (metrics updated April 1, 2024 to reflect expanded scope). Corporate ARR is also embedded for segment leaders .
• Corporate program weights for corporate NEOs (reference baseline): Revenue 25%, Operating Profit (non-GAAP) 50%, ARR 15%, Intelligent Edge revenue 10% . Segment leaders used business segment measures (specific weights not disclosed) .

Long-term incentives (LTI):

• PARSUs (performance RSUs): two- and three-year tranches measured on non-GAAP net income growth with relative TSR modifier versus S&P 500; 50% vests after two years and 50% after three years, subject to performance .
• FY24 PARSU target value: $2,500,000; RSU target value: $2,500,000 .

Program performance history:

• FY23 PARSU segment-one (2-year): 108% of target earned (relative TSR modifier 107.9%) .
• FY22 PARSU segment-two (3-year): 88.3% of target earned after adjusting Russia/Belarus exit effects; relative TSR modifier ~112.4% .

Equity Ownership & Alignment

• Beneficial ownership: 57,180 shares (less than 1% of outstanding) as of December 31, 2024 .
• Outstanding awards at FY24 year-end: 159,426 unvested RSUs (market value $3,107,213) and 159,426 unearned performance units (market value $3,107,213); plus prior-year grants remaining .
• Aggregate grants under 2021 Plan as of Feb 3, 2025: 290,452 time-vested RSUs and 750,192 performance-based RSUs (at maximum assumption; target would be 50% of stated PSUs) .
• Vesting and realized supply: FY24 vesting delivered 235,823 shares; options exercised 7,671 shares; realized value on vested stock $4,238,967 .
• Ownership guidelines: executives must hold 5x base salary; as of FY24, all NEOs met or were on track to meet guidelines within five years .
• Hedging/pledging: prohibited for executives; insider trading windows and preclearance apply to Section 16 insiders .

Employment Terms

• Severance Plan for Executive Officers (SPEO): EVP multiple 1.5x (base + 3-year average annual incentive) plus 18 months health stipend; double-trigger equity vesting in change-in-control; PARSUs vest at target on double-trigger .
• Potential payouts (as of Oct 31, 2024):

• Clawback: mandatory recovery compliant with NYSE Rule 10D-1 for restatements; broader discretionary clawback for misconduct covers both performance- and time-based awards .

Investment Implications

• Pay-for-performance linkage: FY24 bonus paid at 192% of target on strong segment execution, with MBOs focused on AI momentum, talent, inclusion, and environmental goals explicitly included in executive scorecards—indicating high sensitivity to operational KPIs and strategic initiatives .
• Equity supply/overhang dynamics: Significant outstanding RSUs/PSUs (e.g., 290,452 RSUs and up to 750,192 PSUs at max) and FY24 vesting (235,823 shares) suggest ongoing insider supply; however, anti-hedging/pledging and ownership guidelines (5x salary) align long-term incentives with shareholders .
• Retention risk mitigants: EVP-level severance (1.5x) and double-trigger vesting in a CIC provide retention incentives through potential strategic transactions (e.g., Juniper acquisition context), while clawback and strict trading policies reinforce governance .
• Execution track record: MacDonald’s leadership delivered industry-leading Server profitability and advanced HPE’s integrated AI infrastructure/software story—favorable for value creation as HPE targets AI-driven growth across networking, hybrid cloud, and HPC & AI .
• Company-level context: FY24 cash generation (CFO $4.3B; FCF $2.3B) supports capital allocation and compensation funding; ARR growth (+49% YoY to $1.9B) indicates progress in as-a-service transition tied to executive metrics .