Intel shareholders file case asking ex CEO, CFO to return 3 years of salary

https://www.cfodive.com/news/intel-shareholders-yank-exceo-cfo-compensation-foundry/736193/

by YetAnotherNick • 2 years ago

209 111 2 years ago

cfodive.com

bhaney• 2 years ago

That must be an awful lot of salary if it's worth the reputational damage of bringing public attention to this.

lazide3• 2 years ago

Eh, or they want their names in the news for ‘doing something’, even if it’s ultimately pointless.

kopirgan• 2 years ago

Lawyers will make 3 years salary

chollida13• 2 years ago

- No serious hedge funds or other activists involved in this, ie no adults involved, check

- 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.

yieldcrv2• 2 years ago

If these guys cant use the SEC whistleblower bounty program then there isn't a case

This is just something petty

chollida13• 2 years ago

If these guys cant use the SEC whistleblower program then there isn't a case

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.

ozim• 2 years ago

Yeah good luck hiring next CEO to Intel.

arthurcolle• 2 years ago

up or down?

MoreMoore2• 2 years ago

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.

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.

pantalaimon• 2 years ago

Zero patience for anything that doesn't bring in billions and isn't immediately successful.

That reminds me a lot of Google

vasco3• 2 years ago

Maybe you have insider knowledge but if you say you don't know - how do you know what the CEO leaving is a symptom of? (I don't know)

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.

highwaylights2• 2 years ago

Ironically I think this is the nail in the coffin.

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.

Octoth0rpe• 2 years ago

We're all just waiting for Intel to give up on the Arc GPUs because of it.

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.

pbhjpbhj2• 2 years ago

It didn't' work, that's not a crime. //

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.

szundi• 2 years ago

Some investors made a wrong bet and trying to save face in front of their clients - spending even more money of those clients on lawsuits

Almondsetat• 2 years ago

Individual gains, collectivized losses

bradleyjg3• 2 years ago

Nope, this isn’t being driven by any shareholders. The lawyers want a big payday and found a client of convenience. If they win they’ll ask the count for a percentage of the value of the judgment using an innumerate formula for value.

miohtama• 2 years ago

In the US of A, in the land of free and brave, it's a crime if the stock price does not go up. Probably legal fees are very minor compared to losses and it would be bad fiduciary duty not to sue if there is even 1% chance to win by a miracle.

highcountess2• 2 years ago

I don’t think it is accurate to think that the board must be involved for there to be merit. The board represents a totally different set of interests and priorities, many of which may even directly contradict and even clash with those of shareholders, even if they are shareholders themselves.

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.

Dalewyn• 2 years ago

He left because his plan didn't work.

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.

bboygravity• 2 years ago

Why not just invest in a company where the CEO and board take no salary to begin with?

They exist.

highwaylights2• 2 years ago

Wouldn’t be relevant here, as there are no CEOs anywhere who don’t take compensation.

If they’d been taking their compensation as stock grants then they’d want that back instead.

chollida13• 2 years ago

Interesting.

Which boards take no salary?

okasaki2• 2 years ago

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.

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?

lotsofpulp3• 2 years ago

It is the risk that you won’t be able to convince one of the handful of people capable of understanding the most technologically advanced manufacturing processes in the world, having the right connections in the industry, to lead a culture change to right a ship.

Also, Gelsinger did not get $100M+.

https://finance.yahoo.com/news/pat-gelsinger-lost-massive-14...

Retric2• 2 years ago

The “risk” is based on alternatives and what gaining a reputation as a failure if you join a sinking ship at a company going through CEO’s quickly does to your future prospects.

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.

daft_pink• 2 years ago

I’m not convinced that clawing back salary after you fire people is a good and decent public policy.

What if everyone who sucked at their job had to payback 3 years salary? Doesn’t really make sense.

lazide3• 2 years ago

For normal folks? For sure. And the law doesn’t allow it for normal folks.

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.

signa11• 2 years ago

just like doctors insurance, are there ceo insurance as well ?

gosub100• 2 years ago

I don't think paying people tens-of-millions of dollars in salary is good public policy. he didn't contribute anywhere near that amount of value to the company. If CEOs want to make this kind of money it had better be tied to results only. what kind of logic is "paid if you succeed, paid if you fail" ?

aetherspawn• 2 years ago

Were they bad at the job, or was AMD and Apple just better?

I don’t see how that can be fair.

nic547• 2 years ago

AMD and Apple have no Foundry

lnsru• 2 years ago

AMD got rid of the foundries in the past. The other company is GlobalFoundries and looks like to be doing fine. Intel tried to do the same 15 years later, but didn’t succeed. It’s really hard to have both things right - semiconductor manufacturing process and prefect processor design.

wtcactus• 2 years ago

First they shamelessly out the only engineer that could and wanted to be Intel’s CEO in a moment of crisis before his plan could actually be applied.

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.

RamblingCTO• 2 years ago

how to loose trust of future c level executives: speedrun. Seriously, who would work there after that? If it was gross negligence or something, ok. But not "plan didn't work".

kayge• 2 years ago

Hell I'll do it, for a bargain too. Pay me $10 million (salary+bonus) for 1 year and let's see how it goes ;)

A_D_E_P_T• 2 years ago

The complaint itself is here:

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.

amarcheschi• 2 years ago

Flashback to 2022 https://www.pcgamer.com/intel-ceo-says-amd-is-in-the-rearvie...

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)

a012• 2 years ago

If Gelsinger’s turnaround plan didn’t work and even got sued for then I think this is the fubar moment for Intel. R.I.P

oefrha• 2 years ago

even got sued

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.

dathinab• 2 years ago

Through outside of patent and copyright law very many of the law suites commonly brought up as "frivolous" are actually very reasonable law suites and both the reason they are well known and them being known as "frivolous" is because of company propaganda so that they can push for more forced arbitration.

smolder• 2 years ago

I think it was FUBAR before Pat came back. That was always going to be a tough ship to right. I'm not sure how much you can credit him with stumbles and successes since, but at least Arc is looking decent with the most recent release. I also think the 285k and ilk aren't such bad chips as a first foray into external fabrication. They're strong all-around performers despite some minor regressions, and they're working in a smaller power budget.

qwytw• 2 years ago

but at least Arc is looking decent with the most recent release

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.

phtrivier• 2 years ago

As a laymen, my prior is that it that the suit has a 0% chance of ending with the top executives giving all the money back.

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 ?

highcountess2• 2 years ago

Is not quite zero, even if there is no technical cause, because the suit itself may just be a pressure vehicle and the CEO may feel pressure among his social strata to give some back as a type of penance as condition to remain in good graces and not slam the door shut on any future opportunities. It’s a club, and they want to remain in it.

lupusreal3• 2 years ago

This is dumb and obviously won't work. I don't expect random shareholders to know better, but what about their lawyers? Why is it okay for their lawyers, who should know better, to waste their clients money and harass these executives with a lawsuit that they know is baseless?

ChrisMarshallNY• 2 years ago

That happens all the time. The lawyers make money, which is why they do it.

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.

lupusreal3• 2 years ago

I understand the motive of the lawyers, but why do the law and the licensing bodies allow them to get away with this? If a dentist gets caught drilling healthy teeth he'll be sent to prison, or at least lose his license. Baseless legal threats may not be bodily harm, but on many occasions they've driven people to suicide. Lawyers are utterly lawless.

jl6• 2 years ago

The only way this could go anywhere is if the employees in question had a very clear performance contract, or if there was significant malfeasance.

fidotron• 2 years ago

I have been telling everyone for the last decade that Intel proper is a lost cause, and it's partly due to attitudes like this around it which would lead to the CEO etc. taking the heat. *

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-...

hinkley• 2 years ago

I sold INTC and bought TSMC about five years ago. Everybody got nice Christmas presents this year because I sold some of my TSMC shares to rebalance my portfolio. It doubled this year and is 65% above its previous plateau.

jacknews• 2 years ago

Let's see where Intel is in 5 years now the MBAs, finance and legal are running the show again.

Pat may not have turned the ship around, but it looked like he was starting to stop the rot at least.

heisenbit• 2 years ago

You mean the shareholders who extracted the money over the years which is now missing when we come to the place in Moore‘s Law where the investment requirements are going through the roof?

PedroBatista• 2 years ago

Looks like Intel is royally screwed.

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.

atoav• 2 years ago

What feels like once in a decade we see the "responsibilties" impact an executives life, responsibility which they frequently cite to justify their high salaries.

This should happen far more often. Instead the failures of those people are often carried by states and thus by all of us.

anoncow• 2 years ago

It is sad to see what is happening to Intel.

nubinetwork• 2 years ago

I hope Pat respectfully says no after the board forced him out...

Havoc• 2 years ago

Good old American fix it with a lawsuit approach.

bradleyjg3• 2 years ago

We should get rid of derivative lawsuits. There’s plenty of money sloshing around in the securities space. Lawyers can work with activist investors to pay their bills if there’s a real case. But the system of suing on behalf of shareholders that never asked you to represent them needs to go.

caseyy2• 2 years ago

Is this... CEOs being forced into accountability for their actions instead of thousands they lay off? Well, one can dream.

grecy• 2 years ago

More recently those consequences had a lot more of a bang…

caseyy2• 2 years ago

In Japan it's not unheard of for chief executives to take pay cuts when their plans don't work out. If there are bonuses in good times, would it not incentivize executives to perform better if there was also docked pay and executive layoffs in bad times?

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.

ksec3• 2 years ago

Before I go into the article. I think the front page algorithm is getting silly.

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.

pbhjpbhj2• 2 years ago

HN has manual moderation too -- I'm pretty sure 'dang' (one of the moderators) has indicated they can alter the trajectory of stories; like making them drop faster.

Intel shareholders file case asking ex CEO, CFO to return 3 years of salary

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