Mark Adams

About Mark Adams

Mark Adams, age 60, has been President and CEO of Penguin Solutions (formerly SMART Global) since August 31, 2020 and a director since September 2020; he holds a BA in Economics from Boston College and an MBA from Harvard University . Under his leadership, FY2024 revenue was $1.17B with record non-GAAP gross margin of 31.9% as the company rebranded and pivoted toward AI/HPC solutions; in Q2 FY2025, net sales grew 28% YoY to $366M and non-GAAP EPS rose to $0.52 as management raised the full-year revenue outlook midpoint . Pay-versus-performance disclosures show cumulative TSR value of $164 (vs $100 base) for FY2024, with “company selected” performance measure being non-GAAP operating income ($120.3M in FY2024) .

Past Roles

External Roles

Fixed Compensation (multi-year)

2024 target bonus for Adams was 100% of base salary ($750,000); actual payout reflected company and individual performance (see below) .

Performance Compensation

• Annual bonus design (FY2024): 75% Financial (non-GAAP operating income 75% weight; net sales 25% weight), 25% Individual performance; 10% of target bonus tied to measurable ESG goals .

• FY2024 results vs targets (Company-wide): | Metric | Weight | Target | Actual | % of Target | Payout effect | |---|---:|---:|---:|---:|---:| | Non-GAAP Operating Income ($M) | 75% of Financial | $180.8 | $120.3 | 66.6% | Contributed to Financial Factor 71.0% pre-decelerator | | Net Sales ($M) | 25% of Financial | $1,386.4 | $1,170.8 | 84.4% | Contributed to Financial Factor 71.0% pre-decelerator | | Financial Factor (pre-decelerator) | — | — | — | — | 71.0% | | Financial Factor (post-decelerator) | — | — | — | — | 0.0% (under 80% threshold) | | Individual Performance Factor (Adams) | 25% | — | — | — | 50.0% | | Total Bonus Payout (Adams) | — | $750,000 | — | — | $93,750 (12.5% of target) |

• Long-term incentives:

  • 2024 annual grant: 50% RSUs (82,486 target shares), quarterly vesting over 4 years; 50% PSUs (82,486 target) with 3-year performance based on relative TSR vs Russell 2000 median (0–200% payout) . RSUs vest quarterly; PSUs cliff-vest after 3 years, subject to performance .
  • Legacy 2020 PSAs: 150% price-hurdle tranches fully vested; two 200% tranches vested in 2022; final 200% tranches forfeited for non-attainment .

• Pay vs Performance reference points:

  • Cumulative TSR value index FY2024: $164 (company) vs peer group $186 .
  • FY2024 non-GAAP operating income: $120.3M (company-selected measure) .

Equity Ownership & Alignment

• Beneficial ownership (as of Dec 9, 2024): 819,394 shares (includes 156,250 options exercisable within 60 days and 22,479 RSUs scheduled within 60 days); 1.5% of outstanding .
• Outstanding awards at FY2024 year-end (Aug 30, 2024):
  • Options: 145,833 exercisable @ $13.50; 10,417 unexercisable (9/28/2020 grant) .
  • Time-based equity: RSUs 67,021 (9/25/2023 grant) vesting quarterly; RSAs 28,126 and 62,500 from 2020 grants .
  • Performance-based: PSUs outstanding (maximum tracking) from 2021 (168,704) and 2022 (107,958); 2023 PSUs at target 82,486 .
• Ownership/holding policies:
  • CEO stock ownership guideline: 6x base salary; directors 5x annual cash retainer; transition period to March 31, 2026 or 5 years from start .
  • Anti-hedging and anti-pledging: Officers and directors are prohibited from hedging, short sales, or pledging company shares .
  • Clawback: Recovery policy compliant with SEC/Nasdaq for restatements and misconduct-driven harm; applies to incentive pay .

Note on potential selling pressure: RSUs vest quarterly and PSUs cliff-vest after 3 years; actual sale activity requires Form 4 analysis (not disclosed here). The company prohibits pledging/hedging, mitigating alignment risks .

Employment Terms

• Severance (non‑CIC): If terminated without cause or resigns for good reason (outside CIC protection period): 12 months base salary for CEO; prorated bonus if eligible; up to 12 months of health coverage .
• Double‑trigger CIC protection (2 months before to 12 months after CIC): 150% of base salary + 150% of most recent annual bonus; prorated current-year bonus; 18 months health coverage; 100% acceleration of unvested equity .
• FY2024 scenario values (illustrative, based on 8/30/2024):
  • Involuntary termination: $750,000 severance; $33,968 health coverage; no equity acceleration shown .
  • CIC (no termination): equity acceleration value $6,997,828 .
  • Involuntary termination during CIC protection period: $1,265,625 severance; $12,984,693 equity acceleration; $50,346 health coverage .
• Additional CIC feature: Time-based options/RSAs and market-based PSAs vest in full if Adams agrees to remain in a non-CEO role during the CIC protection period .

Board Governance (Director Role)

• Board service: Director since 2020; not independent (current CEO). Independent Chair is Penelope Herscher; CEO and Chair roles are separated .
• Committees: Adams is not listed on Audit, Compensation, Nominating & Corporate Governance, or Cybersecurity committees .
• Attendance: Board held 13 meetings in FY2024; each then-serving director attended ≥75% of Board/committee meetings .
• Director pay: As a management director, Adams receives no additional director compensation .
• Independence and conflicts: Board determined independence for non-executive directors; related-person transactions are governed by policy and Audit Committee review .

Director Compensation (Board program reference)

• Independent director cash/equity retainers (for context): Board member $60,000 cash; $150,000 annual RSU; committee chair/member retainers as disclosed; Chair of Board $110,000 cash .
• Adams does not receive these director fees .

Other Directorships & Interlocks

• Current public boards: Cadence Design Systems (since 2015); Seagate Technology (since Oct 2024; prior 2017–2022) .
• No related party transactions involving Adams disclosed; SK Telecom investment includes board designee and standstill/lock-up provisions at the company level (not specific to Adams) .

Compensation Structure Analysis (alignment signals)

• Shift to at-risk pay: >80% of NEO compensation weighted to variable incentives; 50% of annual equity in PSUs with 3-year relative TSR goal (0–200% payout), aligning with shareholder returns .
• Tough 2024 bonus outcome: Financial factor decelerated to 0% on underperformance (66.6% of non-GAAP OI target); CEO received 12.5% of target driven solely by individual/ESG assessment (signal of pay-for-performance discipline) .
• Clawback/anti-hedge policies and ownership guidelines strengthen alignment and mitigate hedging/pledging risks .
• Limited perqs; minor tax gross-up reported for tax prep fees in “All Other Compensation” ($2,159 in 2024) .

Equity Ownership & Vesting Schedules (selling pressure considerations)

• Quarterly RSU vesting cadence (multiple grants) and annual PSU cliffs can create periodic liquidity windows; options are in place at $13.50 strike from 2020 .
• Anti-pledge policy and ownership guidelines reduce alignment risk; actual selling behavior requires Form 4 analysis not included here .

Performance & Track Record

• Strategic repositioning: Rebrand to Penguin Solutions and focus on AI/HPC; divested 81% of SMART Brazil; secured $200M SK Telecom preferred investment with board rights and standstill .
• Financials: FY2024 revenue $1.17B; record non-GAAP gross margin 31.9% . Q2 FY2025: net sales $365.5M (+28.3% YoY), GAAP EPS $0.09; non-GAAP EPS $0.52; FY2025 outlook midpoint for revenue raised to +17% YoY .
• Governance enhancements: Independent Chair; expanded board diversity; Cybersecurity Committee; new AI Governance Committee and policy .

Investment Implications

• Alignment positives: High at-risk mix, rigorous decelerator that cut FY2024 cash bonuses to near-zero on underperformance, relative TSR PSUs, robust clawback/anti-pledge, and 6x salary ownership guideline for CEO collectively support shareholder alignment .
• Retention and overhang: Significant outstanding PSUs/RSUs for CEO (multi-year vesting) help retention but contribute to potential dilution; equity plan share availability remains substantial, with PSUs based on relative TSR mitigating windfall risk .
• Change-in-control terms: Double-trigger cash/equity acceleration is market-standard; additional vesting if CEO continues in non-CEO role during CIC can facilitate smoother transitions, though represents a rich equity acceleration profile if triggered .
• Near-term execution lens: FY2025 momentum (28% YoY sales growth in Q2 and raised outlook) and AI/HPC repositioning are positives; continued scrutiny on achieving AOP financial targets is warranted given FY2024 bonus deceleration to 0% on financials .

All data are sourced from Penguin Solutions’ SEC filings as cited above.