Intel paid a high price to invite the "savior" back, but shareholders opposed giving him a high salary. According to the regulatory documents submitted by chip giant Intel this week, Intel shareholders voted against the executive compensation plan last week and refused to recognize the sky high annual salary of the company's new CEO pat Gelsinger, which was as high as $178 million last year. A total of 34% of Intel shareholders voted. Among them, the negative vote was as high as 62% (about 1.78 billion shares), almost twice the support vote (920 million shares).
Kissinger and legendary CEO Grove
60% of shareholders voted against
Shareholder dissatisfaction was also directed at board members. The voting results of the shareholders' meeting also showed that Alyssa Henry, a director of Intel, received only 50.4% of the votes, which can only be regarded as reluctantly approving the renewal of her directorship. Shareholders' dissatisfaction with her mainly lies in her lack of focus. Her job is the executive vice president of block, but she also served as a member of the board of directors of Intel, big data company confluence and game company unity.
However, the remuneration standard of senior executives is determined by Intel's remuneration committee and approved by the board of directors. The voting at the general meeting of shareholders can only play the role of suggestion, not mandatory. At the shareholders' meeting last year, Intel shareholders also voted against executive compensation. Therefore, Kissinger's salary last year and this year will not be affected.
Although shareholder voting is not enforced, it will also exert public opinion pressure on Intel from the capital market. Although shareholders can't directly force Intel to cut executive salaries, they are disappointed that they will vote with their wallets, which will directly affect Intel's share price. For the voting results of shareholders, Intel responded that "the company's compensation committee seriously considers the results of shareholders' voting and is highly focused on collecting and responding to shareholders' feedback on the company's executive compensation."
However, most shareholders of Intel disliked the CEO with too high salary, but he was the "savior" they looked forward to last year.
Last January, Intel's board of directors suddenly announced a change of command. Kissinger, the former CEO of VMware, replaced Bob swan, who had only been in office for two years, and officially became the eighth CEO of Intel on February 15. The change was expected by the market, because Intel's share price fell by 17% in 2020, in sharp contrast to the soaring share prices of other technology giants. Such share price performance has triggered dissatisfaction among investors. Active investors led by Dan Loeb have been putting pressure on Intel to change its command.
The stock price performance is the embodiment of Intel's competitive strength. Over the past few years, Intel has faced the most embarrassing situation since the 1980s. The manufacturing process card cannot break through at 10 nm, but AMD, an old rival, continues to erode its share in the server field with the advantage of 7 nm; And when TSMC is already working for Apple When making 5-nanometer chips, intel was still struggling with 7-nanometer chips. In addition, Intel's mobile baseband chip cannot realize 5g commercial use, forcing apple to reach a purchase agreement with Qualcomm, and Intel, which has lost its only customer, has no choice but to sell its business; Apple launched M series notebook chips, and the advantages of performance experience were recognized by the market. In just two years, it realized "de Intel".
Investors therefore want Intel to change its command. Because Si Ruibo is not from technical and product background, he was originally Intel's CFO. In 2018, Brian Krzanich, former CEO of Intel, was forced to leave because of office romance, and Renee James, former president, also left in 2017. Intel, which has no successor, can only appoint Si Ruibo to take over the company temporarily, waiting to find a new CEO from the outside; However, the following year, it was unexpectedly announced that Fuzheng Ruibo was the sixth CEO.
Intel, which has lost its technological advantage, urgently needs to change and regain its confidence. Kissinger's return means that Intel has returned to the culture dominated by engineers and the tradition that the CEO must personally make products and understand technology; For Kissinger's return, some even compared it to Apple welcoming jobs back in 1997.
Intel's savior
Indeed, no one is more suitable to lead Intel to complete the change than Kissinger. As early as 2018, the outside world called on Intel's board of directors to invite Kissinger back to find the technology gene and confidence. Kissinger started his career at Intel, where he worked for 30 years; Moreover, he was a senior technology executive of Intel and a disciple personally brought out by legendary CEO Andy Grove.
Kissinger, 61, joined Intel at the age of 18, starting from the lowest quality inspection engineer to the main architect of the fourth generation 80486 microprocessor, and became the youngest vice president of Intel at the age of 32; At the age of 40, he became the first CTO of Intel and was responsible for building core chip products such as Intel Core and Xeon. Kissinger left Intel in 2009 and became president and COO of EMC. In 2012, he became CEO of VMware, a cloud computing and commercial software company. In the eight years he led VMware, the company's revenue doubled.
On the day Kissinger announced his return as CEO of Intel, Intel's share price soared by 8%. Kissinger publicly stated the company's strategic transformation for the first time, and Intel's share price soared by 6% again. Investors' expectations of Kissinger leading Intel's transformation can be seen. In addition, Kissinger also brought Greg lavender, CTO of VMware, into Intel as CTO, responsible for promoting Intel's technological R & D and innovation.
According to the regulatory documents submitted by Intel in March this year, Kissinger's total salary last year (calculated from February 2021)) was as high as US $178.6 million; This includes a basic salary of US $1 million, a cash bonus of US $1.75 million, a non equity incentive bonus of US $5.1 million, stock grants of more than US $140 million and option grants of US $29.1 million.
In addition, Kissinger has $400000 in other compensation, including $257000 in residential security, $50000 in transportation expenses and $685000 in pension and mortgage income. However, it should be emphasized that Kissinger's options and stock grants are linked to performance and stock price growth.
Obviously, in order to invite Kissinger back to the company, Intel offered an irresistible contract. His salary is equivalent to 1711 times the median salary of Intel employees. In contrast, in the first year of Si Ruibo becoming the CEO of Intel (2019), the total salary was $67 million (including $61.7 million in stock grant value), which was 695 times the median income of Intel employees.
Kissinger certainly doesn't get hundreds of millions of dollars every year. His total salary this year is $26.3 million, including a basic salary of $1.25 million, a performance related cash bonus of $3.57 million and a long-term incentive equity grant of $21.5 million. Compared with other giant enterprises of the same size, this salary is roughly at the middle level.
So how much did Kissinger earn when he was in VMware? According to the regulatory documents previously submitted by VMware, the total salary of Kissinger's CEO in the last year was $16.542 million, including a basic salary of $885000 and a stock grant of $15.65 million. This salary level is equivalent to 115 times the median salary of VMware employees. His total salary in the previous year was $42.549 million. This includes a basic salary of US $1 million, a cash bonus of US $2.51 million and a stock grant of more than US $40 million; Equivalent to 306 times the median salary of VMware employees.
The share price is low and you can't get money
It can be seen that the biggest part of Kissinger's salary increase after joining Intel is the stock grant of up to $140 million, which is equivalent to his salary in vmmare for at least five years. Intel explained, "when determining this one-time equity grant, the compensation committee took into account the compensation value that Kissinger gave up when he left VMware, his unique technical ability, the fierce competition in the talent market for senior executives, the breadth of the company's transformation and the importance of creating shareholder value."
In fact, when Intel submitted regulatory documents in March this year, Kissinger's sky high salary caused great controversy and dissatisfaction of shareholders. This is mainly because Intel's current share price and performance are not satisfactory to shareholders.
Intel's revenue in fiscal year 2021 increased by only 1%, while its share price even fell by 18% compared with the same period last year. Due to the slowdown in global PC market demand and the increase in supply chain uncertainty, Intel's performance indicators in the second quarter were lower than market expectations. Moreover, with the continuous decline of the US stock market in the past few months, Intel has not been spared. This year, its share price has fallen by 27% and is at a 52 week low.
Market competition is not optimistic. AMD's share in the server chip market in terms of sales has exceeded 16.5%, an increase of 5.7 percentage points over the same period last year. On the other hand, Intel postponed the release of its server chip granite rapids from 2023 to 2024. Amd CEO Su Zifeng's total salary in 2021 was "only" US $29.5 million, but she received US $58.53 million in 2019 (including US $53 million in stock grant), becoming the "working emperor" of that year.
In fact, Kissinger didn't get hundreds of millions of dollars, because the downturn of stock price directly affected Kissinger's income. Kissinger's $140 million stock grant is not unconditional and direct, but bound with Intel's stock price performance in the next five years. Intel explained that as the share price continued to decline, even lower than when Kissinger took office, he has not received any equity grant yet.
But even shareholders who are not satisfied with Kissinger's sky high salary have to admit that now Intel needs Kissinger's leadership more, so it will not hesitate to dig him from VMware. Moreover, Intel's turnaround plan will not be completed in a year or two. Kissinger has just started working for a year.
After taking office, Kissinger proposed a turnaround strategy of tens of billions of dollars, including investing $20 billion respectively to build factories in Arizona and Ohio, actively planning European factory projects, and planning to promote Intel to accept OEM orders from other chip companies. This is a huge business transformation for Intel, which originally adhered to the IDM model.
According to Kissinger's plan, Intel is expected to achieve an annual sales growth of 10% by 2025. On the other hand, short-term performance is still under pressure, and with increased capital expenditure, negative free cash flow of more than $1 billion may appear in the current fiscal year. In addition, Intel just announced this year that it would spend $5.4 billion to acquire tower semiconductor, an Israeli special technology manufacturer.
The working emperor gets a sky high annual salary
Of course, the problem of dissatisfaction caused by excessive executive compensation is not unique to Intel. When the company's performance is excellent and the stock price is strong, shareholders may not care about the sky high salary of executives and think it's worth it; However, when the enterprise performance stagnates, the market competitiveness declines and the stock price performance is depressed, investors will pay attention to the sky high salary of senior executives.
According to the statistics of as you know, a shareholder rights protection organization, the shareholders of 16 companies in the S & P 500 index voted against the salary standard of senior executives last year. The business of cruise company Norwegian Cruise suffered a heavy blow during the epidemic, but this did not affect the company's CEO Frank del Rio to get us $36.4 million in 2020, more than doubling year-on-year.
This year, at & amp; T. Shareholders of many giant companies such as GE and Philips have said no to the sky high salary of executives. Ge CEO Larry Culp received $73 million last year, and 58% of shareholders voted against his salary standard. Just last week, Philips shareholders voted against awarding a 1.8 million euro ($1.89 million) bonus to the CEO because Philips's share price was less than half that of the same period last year.
Due to the recent disappointing financial report of Amazon and the significant decline of its share price, Amazon's active investors also called for opposition to the salary of new CEO Andy jasse as high as $212 million last year at the shareholders' meeting on May 25 (of which the basic salary is only $175000, mostly stock grants). Jesse officially took over Bezos last year as the second CEO of Amazon.
However, last year's working emperor was not Jesse. Discovery CEO David zaslav was paid as much as $246 million last year, including a base salary of $3 million and option grants of $190 million. In contrast, Apple CEO cook's total salary last year was $98.7 million, including $82.3 million in equity grant, 12 million in non equity bonus and $3 million in basic salary.
The founders of technology giants such as Bezos, Zuckerberg, page and Brin basically don't get paid by the company. Their sky high wealth comes almost entirely from the sharp appreciation of their huge shares. Musk's huge wealth also comes mainly from his Tesla shares and the stock price linked option grant agreement reached between him and Tesla's board of directors. As Tesla changed from a small company with a market value of tens of billions of dollars to a global giant with a market value of more than one trillion dollars, Musk's personal value also expanded sharply from $20 billion to the world's richest man with a market value of more than $200 billion.
However, unlike "working Emperors" such as Kissinger, Jesse and cook, they are not the founders and major shareholders of enterprises. They manage mature giant enterprises with a market value of hundreds of billions or even trillions of dollars. The granting of shares and options approved by the board of directors is the most important part of their source of wealth. After ten years as CEO of apple, cook is now worth more than $1.5 billion.