Intel’s newly departed CEO Pat Gelsinger could be walking away with just over $10 million in severance pay.
As per a filing with the Securities and Exchange Commission (SEC) today, Intel and Gelsinger entered into a “retirement and separation agreement” that will entitle the former CEO to a payment equal to 18 months of his base salary of $1.25 million, which equates to $1.875 million. Additionally, he will receive 1.5 times his current target bonus, which is 275% of his base salary — this works out at $5.16 million. Both these payments will be made over an 18-month period through payroll.
But on top of that, Gelsinger will also receive a pro rata payment that’s equal to 11/12th of his 2024 annual bonus, which works out at around $3.15 million — however, this is based on company performance and has additional conditions. So in total, Gelsinger will be exiting with $7 million at the very least, with the potential to hit $10.18 million.
Troubled times
It has been a dismal year for Intel, as the chip giant saw its valuation drop by some 30% in early August off the back of poor financial results — the company revealed a net loss of $1.6 billion versus a profit of $1.5 billion over the previous year. Consequently, Intel laid off 15% of its workforce — 15,000 people — to cut costs.
A $10 million payout for the CEO of a $103 billion company could be deemed on the low side, but it’s worth noting that Intel’s market cap was well over double that when Gelsinger took the helm in 2021. That said, WeWork founder Adam Neumann bagged an exit package worth well over $400 million, while Yahoo’s former CEO Marissa Mayer left with $54.9 million in 2016, both leaving their respective companies in less-than-fine fettle at the time.
According to a Bloomberg report yesterday, Gelsinger was given the option of retiring, or face the sack. His departure, effective December 1, came after nearly four years in the hot seat, and he’s replaced by interim co-CEOs David Zinsner and Michelle Johnston Holthaus, Intel’s CFO and GM of client computing group, respectively. The Intel board of directors has formed a search committee to identify a permanent replacement.
Intel’s shares initially surged on news of Helsinger’s departure; however, they later settled at roughly the same figure they’d been before the announcement — a sign, perhaps, of the continuing uncertainty around the chip giant’s future as it continues its transition to a foundry chip-manufacturing model.
Boston, MA July 15