Stephen McMillan
TERADATA CORP /DE/About Stephen McMillan
Stephen “Steve” McMillan is President and Chief Executive Officer of Teradata (TDC) and a member of the Board since 2020; he is 54 and holds a B.S. in Management and Computer Science from Aston University . Under his leadership, 2024 results included Total ARR of $1.474B, Public Cloud ARR of $609M, Cash From Operations of $303M, Non-GAAP EPS of $2.42, and Free Cash Flow of $277M, as Teradata advanced its hybrid cloud and AI strategy despite elongated deal cycles . Say‑on‑pay support was strong at 95.4% in 2024, and the program remains heavily performance‑weighted with robust clawback, anti‑hedging/pledging, and stock‑ownership guardrails .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Teradata | President & Chief Executive Officer | 2020 – Present | Led pivot to hybrid cloud/AI platform; 2024 Public Cloud ARR $609M; Total ARR $1.474B . |
| F5 Networks | EVP, Global Services | 2017 – 2020 | Scaled global services for cloud/application delivery . |
| Oracle | SVP, Customer Success & Managed Cloud Services | 2015 – 2017 | Drove managed cloud/customer success for enterprise clients . |
| Oracle | SVP, Managed Cloud Services | 2012 – 2015 | Expanded managed cloud operations . |
| IBM | VP, Strategic Outsourcing | 2009 – 2012 | Ran global outsourcing engagements . |
| IBM | VP, CIO of Global Services | 2007 – 2009 | Led internal IT for Global Services . |
| IBM | Various senior management positions | 1993 – 2007 | Broad leadership in services/consulting . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| — | — | — | Public company board experience: N/A . |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary ($) | 800,000 | 800,000 |
| Target Bonus (% of base) | 125% (CEO) | 125% (CEO) |
Performance Compensation
2024 Annual Cash Incentive (2024 Management Plan)
| Measure | Weight | Threshold | Target | Maximum | Actual | Payout for Measure | Notes/Vesting |
|---|---|---|---|---|---|---|---|
| Total ARR Growth (CC) ($mm) | 30% | 75 | 94 | 103 | (70) | — (below threshold) | Cash paid after FY, subject to plan rules . |
| Public Cloud ARR Growth (CC) ($mm) | 30% | 160 | 200 | 220 | 90 | — (below threshold) | Gated by Non‑GAAP Op Margin . |
| Non‑GAAP Operating Margin ($mm) | 40% | 303 | 337 | 371 | 376 | 200% | Non‑GAAP reconciliations in Appendix B . |
| Company‑wide Payout | — | — | — | — | — | 80% of target | No individual modifiers used . |
McMillan’s 2024 bonus payout: $800,000 (80% of target), consistent with the above plan outcome .
Long‑Term Incentive Structure and Awards
- Mix and scale (2024 grants): 60% performance‑based RSUs (2024–2026 LTIP), 40% service‑based RSUs; CEO total LTI opportunity $12.5M ($7.5M performance; $5.0M service) .
- CEO 2024–2026 LTIP (performance RSUs): 172,692 target units; grant date 2/27/2024; target fair value $6,436,231; max fair value $9,654,346 (based on $37.27 close) .
- 2022–2024 LTIP earned at 72% (company‑wide) .
- Program evolution: 2025–2027 LTIP shifts to 50% performance RSUs / 50% service RSUs; introduces Rule of 40 and annual FCF metrics; max payout up to 200% .
| LTIP Cycle | Metric | Weight | Design Detail |
|---|---|---|---|
| 2024–2026 | 2026 Total ARR | 40% | 3‑yr endpoint target; pay vs performance . |
| 2024–2026 | 2026 Total Public Cloud ARR | 20% | 3‑yr endpoint target . |
| 2024–2026 | 2024–2026 Free Cash Flow | 40% | 3‑yr cumulative FCF . |
| 2025–2027 | 2025 Total ARR | 50% | Earned vs 2025 target; vests pro‑rata over 3 years . |
| 2025–2027 | Rule of 40 (’25–’27) | 25% | Annual goals set at start; vests at end of 3‑yr period . |
| 2025–2027 | Free Cash Flow (’25–’27) | 25% | Annual goals set at start; vests at end of 3‑yr period . |
Note on 2024 headwinds and LTIP adjustments: Given elongated sales cycles and revised long‑range plan, the Compensation Committee reset performance goals for the 2023–2025 and 2024–2026 LTIPs and reduced maximum payout from 200% to 150% to retain critical talent and align with updated expectations; alternatives (retention grants, cash supplements) were rejected as more costly/dilutive .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 208,856 shares; <1% of outstanding (96,035,434 shares outstanding as of 3/21/2025) . |
| Ownership Guidelines | CEO 6x base salary; McMillan in compliance . |
| Hedging/Pledging | Executive officers/directors prohibited from hedging and pledging Teradata securities . |
| Clawback | Dodd‑Frank/NYSE‑compliant clawback; recovers excess incentive comp on restatements; harmful activity forfeiture also applies . |
| Option Usage | Company did not grant options in 2024 and generally does not use options . |
Employment Terms
| Topic | Key Terms |
|---|---|
| Start Date / Offer Highlights | Effective June 8, 2020; initial base $800k; target bonus 125%; $500k sign‑on with repayment conditions; $15k/month commuting allowance; eligible for Executive Severance Plan and CIC Plan . |
| Executive Severance Plan (non‑CIC) | For McMillan (and all NEOs): cash equal to 1x salary + 1x target bonus; pro‑rata target annual cash incentive; 12 months benefits subsidy; up to 1 year outplacement; pro‑rata vesting of service‑based and performance RSUs (performance based on actuals). McMillan also gets an additional 12 months vesting credit on both service‑ and performance‑based RSUs (performance measured on actuals) . |
| Potential Payout (Non‑CIC; 12/31/2024) | Cash $1,800,000; RSUs $20,296,618; Welfare $14,313; Outplacement $18,000; Total $22,128,931 (valued at $31.15 stock price; performance RSUs at target) . |
| CIC Plan (Double Trigger) | If terminated without cause/for good reason within 2 years post‑CIC (or 6 months pre‑CIC in connection), lump sum 2.0x salary + 2.0x average bonus (3‑yr average); pro‑rata average bonus; 2 years medical/dental/life; 1 year outplacement/financial counseling; no excise tax gross‑ups; 1‑year non‑solicit; confidentiality; equity vests on double trigger per plan . |
| “Good Reason” (summary) | Includes material diminution in role, salary reduction, failure to pay incentive, significant reductions in target opportunities, failure to continue benefit or equity plans, or certain relocations; specific provisions negotiated for McMillan at hire . |
Multi‑Year Summary Compensation
| Year | Salary ($) | Bonus ($) | Stock Awards ($) | Non‑Equity Incentive ($) | All Other ($) | Total ($) |
|---|---|---|---|---|---|---|
| 2022 | 800,000 | — | 13,079,278 | 970,000 | 186,075 | 15,035,353 |
| 2023 | 800,000 | — | 12,789,835 | 950,000 | 192,914 | 14,732,749 |
| 2024 | 800,000 | — | 15,633,777 | 800,000 | 184,532 | 17,418,309 |
Board Governance and Director Role
- Dual role: McMillan serves as CEO and Director; he is a member of the Board’s Executive Committee .
- Independence and leadership: 8 of 9 directors are independent; roles of Chair and CEO are separated; non‑executive, independent Chair is Michael Gianoni .
- Attendance: In 2024, each director attended ≥75% of Board/committee meetings; 27 total meetings held .
- Governance practices: anti‑hedging/pledging, robust ownership guidelines, majority voting, proxy access, no poison pill .
Compensation Structure Analysis (pay‑for‑performance levers)
- Cash vs equity mix: CEO target LTI $12.5M in 2024 with 60% performance RSUs aligns pay to multi‑year ARR/FCF outcomes; 2024‑2026 design balances growth and cash generation .
- Annual plan gating: Non‑GAAP Operating Margin gated ARR growth metrics; despite 200% payout on margin, ARR misses drove 80% overall payout, reflecting balanced incentives and cost discipline .
- Program changes/retention: Committee adjusted 2023–2025 and 2024–2026 LTIP targets and cut max to 150% to address macro/forecast shifts and retention; a potential governance yellow‑flag but paired with reduced upside and investor engagement .
- Ownership alignment and safeguards: 6x salary ownership, prohibitions on hedging/pledging, Dodd‑Frank clawback effective Oct 2, 2023 .
SAY‑ON‑PAY & Shareholder Feedback
- 2024 say‑on‑pay approval: 95.4%; ongoing outreach with investors representing >65% of shares on strategy/compensation/ESG; previewed 2025 plan changes (Rule of 40, mix shift) .
Risk Indicators & Red Flags
- LTIP goal adjustments across two cycles (2023–2025; 2024–2026) to re‑align with revised plan—retention‑driven but may attract proxy advisor scrutiny; max reduced to 150% to mitigate windfall risk .
- Securities class action investigations were announced by plaintiff firms in 2024 alleging misstatements around ARR timing; allegations reference management commentary on deal timing; outcomes unresolved as of those notices .
- No related person transactions disclosed since 2024; anti‑hedging/pledging reduces alignment risks; no excise tax gross‑ups in CIC .
Employment & Contracts (retention, transition)
- Severance: 1x salary + target bonus, pro‑rata target bonus, 12 months benefits and outplacement; pro‑rata vesting (performance RSUs based on actuals); extra 12 months vesting credit uniquely for McMillan; restrictive covenants required .
- Change in Control: 2x multiple of salary + average bonus (3‑yr), pro‑rata average bonus, 2 yrs benefits; equity double‑trigger vesting; one‑year non‑solicit; no 280G gross‑ups .
Equity Vesting and Potential Selling Pressure
- Service RSUs vest over three years; performance RSUs cliff‑vest based on multi‑year goals (designs vary by cycle); such schedules typically produce periodic tax‑withholding sales but hedging/pledging is prohibited .
- CEO holds 208,856 shares (<1% of outstanding), with 6x salary ownership requirement met; no pledging permitted under policy .
Expertise & Qualifications
- Deep enterprise software/cloud services leadership across Oracle, IBM, and F5; skills aligned to cloud/data/AI strategy; BS in Management and Computer Science (Aston University) .
Investment Implications
- Alignment: High at‑risk, multi‑year equity tied to ARR/FCF and 2025–2027 Rule of 40 supports durable growth and cash discipline; robust ownership/clawback/anti‑hedge policies enhance alignment .
- Retention vs governance trade‑off: LTIP goal resets (and lower max) reflect a pragmatic retention step amid forecast resets; monitor execution vs revised targets and 2025 plan efficacy .
- Execution risk: 2024 ARR shortfalls vs targets underscore sales cycle/friction; however, strong Non‑GAAP Operating Margin performance and FCF suggest cost/discipline levers; gating design curbed payouts appropriately .
- Governance comfort: Separate Chair/CEO, majority‑independent board, strong say‑on‑pay, and no excise tax gross‑ups support governance quality; ongoing litigation claims are a watch item but not determinative at this stage .