Intel’s Ex-CEO Patrick Gelsinger Awarded $7.85 Million Severance Package, According to Company

This article does not constitute investment advice. The author holds no investments in any of the stocks discussed.

Patrick Gelsinger’s Severance Package from Intel: Key Details Unveiled

Patrick Gelsinger, the former CEO of Intel, is set to receive a severance payout totaling $7.85 million following his unexpected departure from the company last December. This information was disclosed in Intel’s latest annual proxy statement filed with the SEC. Following Gelsinger’s exit, Intel’s stock experienced a notable uptick as investors speculated on various strategic moves, potentially including a spinoff of its foundry segment to enhance financial performance. Meanwhile, Intel’s newly appointed CEO, Lip-Bu Tan, has reiterated his commitment to the foundry business.

Understanding Gelsinger’s Severance Agreement

The specifics of Gelsinger’s severance arrangement reveal that he will receive $7 million disseminated over an 18-month timeframe. This sum encompasses his annual salary of $1.25 million and a target cash bonus of $3.44 million, which accounts for 1.5 times his target bonus opportunity. Alongside this, Gelsinger is expected to receive an additional $822, 200, reflecting his annual cash bonus target for 2024. As stipulated in the agreement, Gelsinger will forfeit any unvested equity awards, having agreed to several conditions: (i) a release of claims against the corporation; (ii) adherence to confidentiality and intellectual property obligations; and (iii) cooperation in any ongoing litigation.

Transition Leadership: Co-CEOs Appointed

Following Gelsinger’s departure, Intel appointed CFO David Zinsner and Products CEO Michelle Johnston Holthaus as co-CEOs. Each co-CEO is set to receive $1.5 million by the end of this month, accumulating a total of $3 million. The proxy statement clarifies that Gelsinger’s severance was influenced by the fact that he fulfilled nearly a full year in his role during 2024, alongside his historical contributions to the company.

Gelsinger's Severance Package Visualization — Gelsinger’s severance package as detailed in Intel’s recent proxy statement.

Lip-Bu Tan: The New CEO’s Strategy and Compensation

As he steps into his new role, CEO Lip-Bu Tan will receive a base salary of $1 million, complemented by a performance-related bonus estimated at 200% of his base pay. Additionally, Tan is set to earn $24 million in stock options and units over the coming three years, alongside a one-time award of $42 million in equity compensation contingent on performance metrics measured over a three-year period.

In a communication to shareholders on Thursday, Tan emphasized his intention to uphold Gelsinger’s cost-saving strategies, aimed at curtailing Intel’s capital expenditures and operational costs. He has also pledged to place equal emphasis on the company’s product development and contract chip manufacturing strategies, explicitly stating his commitment to not spinning off the foundry business despite speculation.

Since Tan’s appointment, Intel’s stock has experienced a robust increase of 10.9%, with a 13.4% rise year-to-date. This recovery comes after a tumultuous 2024, where shares plummeted by 59.6% as the company grappled with profitability challenges and reduced dividends during Gelsinger’s tenure.

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