Intel is making it harder for Gelsinger to make big money • The Register
Intel is making it harder for CEO Pat Gelsinger to earn a significant portion of its compensation package, even as those rewards have become increasingly out of reach as the stock price plummets.
The x86 giant on Tuesday announced changes to how and when Gelsinger can receive payouts from the performance-based equity awards of new hires granted to him upon becoming CEO in February 2021. The changes were outlined in an 8-K regulatory filing with US Securities. and exchange commission.
The changes, among other pay changes for senior executives described, were passed in response to a strong investor rebuke earlier this year to Intel’s top executive pay practices. Shareholders had voted in a nearly two-to-one ratio against the payouts of the chipmaker’s top executives. Although not binding, Intel said at the time that it took the vote seriously.
In general, changes to Gelsinger’s new-hire performance-based stock awards have increased “stock price performance hurdles for certain awards,” while “lengthening the period during which stock price performance hurdles shares must stand,” according to the SEC filing.
For Gelsinger to exercise his performance-based stock options, he must now increase Intel’s share price by 50% – instead of the original figure of 30% – over the five-year period after have received the options. Additionally, Intel’s stock price must stay above that 50% threshold for 90 days instead of the original 30 days for Gelsinger to receive payment.
For its Strategic and Outperformance Stock Units, Intel has removed the ability for Gelsinger to receive payouts for a portion of the awards on the third anniversary of the grant date, meaning he will now have to wait the full five years. from that moment to acquire them. The company also extended the period the share price is above the applicable thresholds of each award from 30 days to 90.
To explain how this makes it harder for Gelsinger to receive payouts for these awards, consider that Intel stock price closed at $29.67 today. That’s less than half Intel’s stock price of $61.81 when Gelsinger became CEO in February 2021.
That means Gelsinger has to work magic to get shareholders absolutely hyped so he can win his performance-based stock options, which requires Intel shares to hit at least 74.47. $ in a few years. To vest its stock units, Intel’s stock price must reach even higher, at $148.95. And stocks must be maintained at this level or higher for three times as long.
Investors have not been happy with the cost of Gelsinger’s comeback plan for Intel, with all the new factories and expensive manufacturing investments it entails. He promised the company would surpass Asian foundry giants in advanced chip-making capabilities by 2025, meaning Intel will have little time to drive the stock price higher before the end of 2020. the grant period next year. ®