Intel's CEO Pat Gelsinger's Severance Pay

In a significant development for Intel Corp., newly departed CEO Pat Gelsinger stands to receive over $10 million in severance as he steps down amidst challenging times for the tech giant. According to a filing with the Securities and Exchange Commission (SEC), Intel and Gelsinger have reached a “retirement and separation agreement”, ensuring that he is compensated handsomely despite the company's recent downturns.

Details of the Severance Package

Under the terms of this agreement, Gelsinger will achieve 18 months' worth of his base salary, which is pegged at $1.25 million annually, translating to an immediate payout of approximately $1.875 million. But that's just the tip of the iceberg. The former CEO is also set to receive a bonus calculated at 1.5 times his current target bonus, which itself is 275% of his base salary. This additional amount brings his total potential earnings to about $5.16 million over the course of the next 18 months.

Additional Potential Earnings

In addition to these payments, Gelsinger is entitled to a pro-rata payment reflecting 11/12ths of his 2024 annual bonus, potentially adding another roughly $3.15 million to his coffers, though this portion is contingent upon Intel's performance moving forward. This means that with certain conditions met, Gelsinger's total severance package could soar to anywhere between $7 million and $10.18 million.

Intel's Financial Challenges

Intel has been grappling with significant challenges recently. The company saw its market valuation plummet by approximately 30% earlier this year amid dismal financial results, reporting a staggering net loss of $1.6 billion compared to a profit of $1.5 billion the previous year. In response to these financial woes, Intel took the drastic step of cutting around 15,000 jobs, amounting to 15% of its workforce, as part of a cost-reduction strategy.

Executive Compensation in Context

While some may argue that a $10 million severance for the CEO of a company valued at $103 billion seems relatively modest, it's crucial to highlight that Intel's market capitalization was more than double that when Gelsinger took charge in 2021. This stark contrast raises questions about executive compensation amid company failures. For context, other tech leaders, such as WeWork founder Adam Neumann, received exit packages that surpassed $400 million, and Yahoo's former CEO Marissa Mayer left her position with $54.9 million in 2016, both during tumultuous times for their respective companies.

Transitioning Leadership

Reports have surfaced suggesting that Gelsinger was presented with the option to either retire or face termination. His resignation is effective as of December 1, following nearly four years in the role. He will be succeeded temporarily by co-CEOs David Zinsner, Intel's CFO, and Michelle Johnston Holthaus, who currently oversees the client computing group. In a bid to stabilize leadership, Intel’s board of directors has established a search committee tasked with finding a permanent replacement for Gelsinger.

Looking Ahead for Intel

As Intel navigates these tumultuous waters, the tech industry is watching closely to see how the company will manage its recovery strategies and if its next leader can turn the tide in its favor.