Pat Gelsinger’s $10 Million Severance: Intel’s Leadership Changes Amid Financial Struggles
Pat Gelsinger, the former CEO of Intel, is set to receive a substantial severance package totaling over $10 million as he concludes his tenure at the company. This payout comes following a recently filed agreement with the Securities and Exchange Commission (SEC), which outlines the terms of his retirement.
Details of the Severance Package
Gelsinger’s severance includes a payment equivalent to 18 months of his base salary, which stands at $1.25 million per year, amounting to approximately $1.875 million. Additionally, he will earn 1.5 times his target bonus, calculated at 275% of his base salary, which translates to about $5.16 million. These payments will be distributed over the next 18 months.
Moreover, Gelsinger is entitled to a pro-rata payment for 11/12ths of his anticipated 2024 annual bonus, estimated to be around $3.15 million. This bonus is contingent upon Intel’s performance, meaning it could vary based on the company’s results. Thus, his minimum departure compensation could reach $7 million, with the potential to exceed $10 million if performance conditions are met.
Challenges Faced by Intel
The past year has been particularly challenging for Intel, with the company’s stock value plummeting by roughly 30% in August due to disappointing financial outcomes. Intel reported a net loss of $1.6 billion, a stark contrast to a profit of $1.5 billion from the previous year. In response to these financial struggles, Intel made the difficult decision to lay off 15% of its workforce, equating to around 15,000 employees.
Comparative Payouts
While Gelsinger’s severance package may seem modest given the scale of Intel, a company valued at $103 billion, it is worth noting that the market capitalization was significantly higher when he assumed the role in 2021. In contrast, other notable tech executives have received far more lucrative exit packages; for example, WeWork’s Adam Neumann left with more than $400 million, and Yahoo’s Marissa Mayer took home $54.9 million in 2016, both during tumultuous times for their respective companies.
Transition Leadership at Intel
According to reports, Gelsinger was presented with the option to retire or face dismissal, leading to his departure effective December 1. He will be succeeded by interim co-CEOs David Zinsner and Michelle Johnston Holthaus, who currently serve as Intel’s CFO and the general manager of the client computing group, respectively. The Intel board has established a search committee to find a permanent CEO.
Following the announcement of Gelsinger’s exit, Intel’s shares initially experienced a spike but soon stabilized at their previous levels, reflecting ongoing uncertainty about the company’s direction as it pivots towards a foundry chip-manufacturing model.
