This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
Former Intel CEO Patrick Gelsinger will receive a severance payment of $7.85 million after he left the company in December, shared the firm in its annual proxy statement filed with the SEC earlier today. Gelsinger's departure was a surprise to many, and Intel's stock rallied after he left as investors bet on multiple options, including a potential spinoff of its foundry business to streamline the balance sheet. However, Intel's new CEO, Lip-Bu Tan continues to assert that he will focus on the foundry business, and the firm's SEC filing also reveals that it will cumulatively pay Gelsinger's two immediate successors, co-CEOs David Zinsner and Michelle Johnston Holthaus, $1.5 million at the end of this month.
Former Intel CEO Gelsinger To Receive 1.5x Target Cash Bonus & Annual Salary As Severance
Intel revealed details of Gelsinger's severance agreement in its annual proxy statement filed earlier today. According to the firm, the former CEO will be paid a total of $7.85 under the agreement. Out of this amount, $7 million will be paid over an 18-month period. The $7 million is made of Gelsinger's annual salary and his target cash bonus. The former CEO will be paid 18 months of his annual base salary of $1.25 million and 1.5x of his target cash bonus opportunity of $3.44 million, according to Intel.
Additionally, he will also receive $822,200 of annual cash bonus target for 2024. As part of his severance deal, he will forfeit his unvested equity awards, Intel added. The firm shared that Gelsinger's severance compensation came after he agreed to: "(i) provide a release of claims in favor of the company; (ii) affirm obligations pertaining to confidentiality and intellectual property; and (iii) litigation cooperation provisions."
After Gelsinger's departure, Intel appointed CFO David Zinsner and Products CEO Michelle Johnston as co-CEOs to help steer the company as it searched for a replacement. For their time spent, the two will receive $1.5 million each, or $3 million in total at the end of this quarter. Intel explains in its proxy statement that Gelsinger's bonus reflects the facts that he spent 11 out of 12 months of 2024 in his previous role as well the years of service that he has given to the firm.
As for new CEO Lip-Bu Tan, his base salary will be $1 million. He will also be paid a bonus 200% of the base salary and a cumulative of $24 million of stock options and units rewarded over three years. Tan's new hire one-time awards include $42 million in stock units and other equity compensation, which will be awarded after as long as three years, depending on performance metrics.
CEO Tan also wrote to shareholders on Thursday, sharing that he will continue Gelsinger's cost savings plan to reduce Intel's capital expenditure and operating costs. He added that he was focused on the firm's product and contract chip manufacturing business equally.
Tan has been careful to assert that he will focus on chip manufacturing at Intel despite earlier rumors claiming that the firm might spin the business off. Since his appointment, Intel's shares have gained 10.9% and are up by 13.4% year-to-date. Intel's shares dipped by 59.6% in 2024 as the firm stopped being profitable and cut its dividend in a disastrous moment in Gelsinger's tenure.
