Intel shareholders file case asking ex CEO, CFO to return 3 years of salary
cfodive.com
cfodive.com
- Fully audited financials not being questioned, check
- CEO and CFO constantly acknowledging the Foundary unit wasn't profitable in quarterly updates, check.
The former CEO was brought in to to try and keep Intel a fully integrated business that designed and manufactured chips. He was very clear upfront about his plan to not divest the foundry and instead to try and build it back up.
It didn't' work, that's not a crime. He left because his plan didn't work. That's what happens to CEO's who try and fail to implement a business plan.
This is just an ambulance chaser lawsuit that doesn't look like it will go anywhere at all.
If there was any merit at all then the board would also be involved in going after the former CEO and CFO.
This is just something petty
I think you are confusing a few things.
The whistleblower program is for insiders. This lawsuit is being brought by outside shareholders. This has nothing at all to do with whistleblowers as there aren't insiders with insider knowledge.
This suit is being brought by outsiders who are unhappy with Intel's performance.
There is no insider here trying to expose anything.
We don't know that it didn't work. We also don't know that selling it off would've been significantly better, so it's weird to pretend that keeping the foundry part of Intel was this big failure. Intel is a cargo ship that doesn't turn on a dime. But the board and investors don't have the patience for long-term strategy that could get Intel out of its downward spiral. The CEO leaving is just another symptom of that, and a sign that Intel is just continuing to dig its own grave, damn the consequences. Just look at all the other projects Intel has tried and failed in the past 20ish years. Zero patience for anything that doesn't bring in billions and isn't immediately successful.
We're all just waiting for Intel to give up on the Arc GPUs because of it.
That reminds me a lot of Google
Unfortunately this rules out everything that involves anything physical (factories, cars, planes, fabs, etc.) and anything requiring research.
In the end it leads to an economy that chases fads and devolves into a pure casino.
https://companiesmarketcap.com/
The only one that sort of went vertical was Meta, but even they had to build tons of data centers and networking infrastructure.
It's very easy to say that the CEO was trying for real and everyone else was against him as he is an engineer so it feels good to say it, but is there truth to the fact that it's just lack of patience and "shortsighted" thinking by the board, or is that just what people repeat because it sounds good to say?
Pat was there from Feb 2021 to Dec 2024. In that time he fired 5k+ people (https://www.warntracker.com/company/intel) and now had plans to fire 15k more. We can also look at earnings during his tenure, I don't need to tell you when he joined because you'll know from looking at this: https://m.macrotrends.net/stocks/charts/INTC/intel/eps-earni...
So in my simple view, we have a guy that came in with an ambitious plan to burn many billions, fire a bunch of people and turn the company around. He did the first two but in 3.5 years couldn't do the actual goal, and was just starting to present some kind of phase two with more layoffs and potentially more burning of money. Plus all the million factors people on the outside wouldn't know. So what we know is the plan wasn't working yet at least, but who knows if it ever will.
it's only shortsighted if you interrupt a good plan, if you interrupt a bad one you are a visionary.
For a very long time, i.e. for a few years, the actual goal had been announced as planned to be achieved towards the end of 2025, when the CMOS fabrication process Intel 18A should become usable for the mass production of Intel server CPUs and laptop CPUs.
If Pat Gelsinger had remained the CEO of Intel, only in 1 year from now it would have become possible to decide whether he has been a good CEO or a bad CEO.
Now, after he has been ousted prematurely, nobody will ever be able to say with certainty whether Pat Gelsinger would have succeeded to redress the fate of Intel or not. Since he has become CEO, all the intermediate milestones towards the stated goal have been achieved in time, even if with various problems, which were nevertheless more or less predictable, because in the past Intel has never been able to do better than this when transitioning to new fabrication processes and new product architectures.
While he has diminished the earnings for shareholders, that was a very good thing to do, because before him Intel has wasted huge amounts of money by giving them to the shareholders instead of using them wisely to remain a competitive company.
Instead of looking at shareholder earnings, you should look at the revenues of the Intel employees. I do not know if this is true, but another poster on this forum has said that Gelsinger has given a raise after becoming CEO, attempting to correct the situation where Intel is well known as a company that provides inadequate compensations to its employees, and he had promised that he will try in the future to improve this. If that is true, it has been something much more valuable than attempting to please the shareholders who have lead the company towards losing its competitivity in the market.
It's very appealing for an engineer as myself to root for an engineer CEO that comes back and turns it around, I know it's a story that everyone would love, that's why when the defence is only that, I suspect that people may just be romanticizing the situation the same way I would / do.
I'm also not sure someone saying "I need X time" means the board needs to treat this as some holy proclamation. A lot of the CEO job is also convincing the board and the markets that the change is coming and at 3.5 out of 5 years I guess the board still wasn't convinced and the markets certainly don't seem to be pricing in a turnaround.
Is that true? How long did they agree it would take originally?
So I have no idea where "he didn't do it in time" came from.
...which means he was allowed to release maybe 1 if even that of Intel's bread and butter, CPUs. They have a lead time of somewhere between 3-5 years. And that's not including fab development, which takes even longer.
So was he "burning billions" or was he investing billions into what made Intel a dominant force in the first place? We'll probably never know, but 3.5 years isn't anywhere close to long enough in this industry.
Pat still deserved longer. Intel is basically a storied brand that needs to be run like a startup because all of its legacy revenue products/models are dying.
there was, though? That's why net income averaged zero, and cash on hand is flat the last 4 years. He didn't run Intel at a loss.
Pushing the whole company towards 18A as soon as possible made a lot of sense. Arc made a lot of sense (as it becomes competitive when you get to 18A). We’re not there yet.
Sacking the CEO, throwing him under the bus, and then publicly demanding salary back just reflects really badly on Intel.
I don’t know the details of what’s happened behind the scenes and if there was any impropriety, that being said:
Intel under Pat was in a bad place, but it wasn’t a public clown show.
Because they were basically doing nothing for 5-10 years. How long do you think it would take to fix a company like that? I mean I'm not necessarily defending Gelsinger but throwing away the entire board and most of upper management would have been be the first step if they were about changing anything..
Investors know that.
They want to keep extracting profits, knowing that when (not if) things go dogshit (even more so than today), the public will bail them out. Since this CEO worked on other stupid things like long term technical viability, instead of pursuing the higher priority (investor returns), he was shown the way out.
2008 was an eye opening year for a lot of rich people.
Now that shines a new light. Not sure where you have this idea but definitely some food for thought.
Basically someone doesn't like Pat. I wouldn't be surprised if it was ex-Intel Board members.
I'm sure all kinds of radical cost cutting is being proposed internally, but I'd be surprised if this was on the line. My thinking is that Arc GPUs are the "walk before you run" product that will lead to Intel producing AI accelerators, which is a reasonable bet re: a pathway to profitability.
I expect we may even aee AI cores on phones, by 2036.
Well yh, when you're being paid a normal wage. In USA that sounds like maybe $200k for proven senior engineers? So, just return anything they took above that - which I'm guessing is going to round to the full wage.
Honestly, I don't really understand why the people are taking so much more than their share even when successful.
The nepotistic, incestuous, little club of boards and CEOs is almost hostile to shareholder interests once forward momentum stalls, at which point divergent priorities emerge.
If the board wants to remain in the board carousel club, they can’t be joining lawsuits against CEOs, when they often themselves are CEOs that frequent the same few exclusive clubs and triple gated communities and celebrate holidays at the same exclusive hotels. There is clearly a stratification there that you are either dismissing or are not aware of. Let me put it this way, the nobility will always hold to each other over any challenges from the merchant class, even if when everyone is making money, there is some mutually beneficial mingling.
He didn't leave, he was fired in the same way that a Drill Sergeant goes "I'm gonna need 10 volunteers..." and then orders 10 unlucky SOBs to gear up.
They exist.
If they’d been taking their compensation as stock grants then they’d want that back instead.
Mark Zuckerberg, Steve Jobs and Jack Dorsey have all at times taken $1 annual salaries.
Actually it will be better, more transparent if he received 24M salary instead of using benefits and bragging about $1.
https://www.thetimes.com/article/facebook-mark-zuckerberg-se....
Note that is a pretty comfortable form of security, including jets.
I need a secure housing. I need a secure meal. I need a secure car, jet, yacht. I need a secure sweatpants...
People also get up in arms on stock grants. Look at the recent Musk case. Regardless of what you think of Musk, any TSLA investor should be ecstatic with what he did with the stock. He took most of his salary in stock and now they want it back. The main reason the numbers sound big is because the stock grew so much.
They have $1 salary and then get a ton of dividends or sell stock (both of which are taxed at waay lower rate than salary)
So they are very well compensated at all times.
I honestly don’t understand why they like to mention this $1 bs all the time.
Which boards take no salary?
Is this the famous risk that we keep hearing CEOs take that require such high compensation? Failing and leaving with 10s or 100s of M?
Also, Gelsinger did not get $100M+.
https://finance.yahoo.com/news/pat-gelsinger-lost-massive-14...
That is one of the reasons Intel is where it is, overpaying for MBA talent and underpaying for engineering talent. A person capable of turning around Intel could easily get work at another tech company earn millions with far less risk and far less publicity. Intel needs some of the smartest people in the US working for them, it should have had the reputation of being among the highest paying employers.
These boards want proven superstars for many reasons and there’s a limited pool. Basically suppose you’re faced with a choice between a low risk CEO position that pays 5m/year you could do for the next 10+ years at a stable company and Intel who is most likely going to dump you. How much are you asking Intel per year, and how much do you want if they decide to terminate your contract for failing at achieving unrealistic goals in an unrealistic timeframe?
Those golden parachutes are often the result of an overly friendly board, but in some cases they are more easily justified.
A lot of them serially run companies into the ground too, and don't have any problems getting appointed.
Sometimes CEO’s, politicians, etc use phrases that don’t necessarily mean what a literal interpretation of them would suggest.
Intel liked to project an aura of their inevitable success, and people inside and outside the company totally believe it. This attracted the sort of hangers on that then added so much corporate gunk that anyone that tried to deal with it would never be allowed to run the ship which they are now sinking. That is on top of the competiton waking up, which was far more predictable than having a single company dominate in the way they had.
* https://montrealrampage.com/king-ludd-12-glad-not-to-be-the-...
> https://storage.courtlistener.com/recap/gov.uscourts.cand.44...
What's interesting, and what the media generally hasn't reported (probably because the dollar amounts are low,) is that the board of directors is also under fire and every member of the board is named in the complaint.
"Demand Upon Defendant ___ Is Excused" refers to the rule that in a shareholder derivative lawsuit the plaintiff is generally required to make a formal demand on the board of directors to remedy the alleged wrongdoing before filing suit. But there is an exception called "demand futility." If the plaintiff can convincingly argue that the board members are too conflicted or otherwise unable to act impartially, the demand requirement is "excused." It doesn't mean that they're not pursuing damages from the board directly, even though the amounts involved are small.
Now, in those years I obsessively spent a lot of time noticing how Intel earnings started to diverge with the sentiment that the ceo tried to pass to the investors. Regardless of how this goes, I'm just happy I could stay away from Intel and buy amd stocks instead (I eventually sold them)
What if everyone who sucked at their job had to payback 3 years salary? Doesn’t really make sense.
This type of thing is only possible when special rules are made for people with enough power they can hide massive fraud/malfeasance in some cases.
This lawsuit seems unlikely to go anywhere though. And frankly, will just increase asking price for CEO salaries.
Pat may not have turned the ship around, but it looked like he was starting to stop the rot at least.
This should happen far more often. Instead the failures of those people are often carried by states and thus by all of us.
Now, they go after him because - like he told them right at the beginning - short term profits were sacrificed in order to ensure Intel’s long term aims.
Good luck finding anyone capable to be the next CEO after these two debacles in less than 1 month.
In a country of frivolous lawsuits, getting sued is almost meaningless. Big companies are sued for all sorts of bullshit all the time. Check back if and when there’s something concrete.
To be fair that really remains to be seen. It took them how many years to ship a single decent card? Sure it's very competitive with last gen Nvidia and AMD GPUs but it's not clear if that's the case only because Intel is willing to sell them with very low margins or even at a loss.
Are there existing cases where it happened ?
I would like to evaluate the probability that they will give _some_ money back. Same question : where do I look for existing case ? Does that ever happen ?
I know some of you might think no known executive would take that job, and I actually know first hand that's largely true. I also know some that definitely would, but that's besides the point. As an investor, you don't want to hire those c-suites that are allergic to accountability.
>198 points by YetAnotherNick 9 hours ago | 101 comments
This is currently at 159 on page 6. I left home and thought I should come back and read it on HN. The points and comments ratio are no way over the top. But it seems to be dropping fast on front page.
This is also on Classic currently at 151.
It doesn't make any sense.
I don’t see how that can be fair.
Not much because of their performance as a company ( although it's ugly ), but because of the board and their major shareholders.
If they went after previous CEOs from ~2015 to ~2020, I can see some of their points. Not sure if a lawsuit now would be of their best $interest$ but they were also too busy raking in money during that time-frame, no amount of lies would matter.
Either way this type of stuff at this critical period in Intel's life might be the swan song for what we know as Intel today.
Not just lawyers, either. I suspect a great many of us were ordered to work on projects that we knew were “dead man walking” disasters, because our bosses ordered it.