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Intel CEO made $178m in first 10 months, AMD CEO got a $2m pay rise
Pat Gelsinger won't unlock most of that unless Xeon giant's stock goes sky high
In a sign of how badly Intel's board wanted Pat Gelsinger to turn around the storied chipmaker, the company paid the new CEO a whopping $178 million in total compensation last year for his first ten or so months on the job. That is nearly eight times what former CEO Bob Swan made in 2020.
The semiconductor giant released the 2021 compensation details of Gelsinger and its other top executives in a proxy statement filed March 30 with the US Securities and Exchange Commission.
Rival AMD released 2021 compensation details for its top executives in a proxy statement a day later, showing that CEO Lisa Su increased her total compensation by a couple million dollars last year – from $27.14 million to $29.5 million.
Gelsinger became Intel's CEO on February 15, 2021, after pitching the company's board of directors on a turnaround plan that included a massive increase in capital expenditures to put up new fabs, which will, in part, support the company's revitalized contract manufacturing business.
For his ten-and-a-half months of work in 2021, Gelsinger received a nearly $1.1 million base salary, a $1.7 million bonus, $169.5 million in stock awards, $5.1 million in non-equity incentive cash, $685,000 in increased pension value that carried over from his previous 30 years at Intel, and $401,600 in other forms of compensation, which included retirement plan contributions, company-provided transportation and residential security.
With Gelsinger's $178 million in total compensation for 2021, the ratio of pay for CEO to median employee was 1,711 to 1, with the median Intel employee earning $104,400 in 2021. By contrast, Intel's CEO-to-employee pay ratio was 695 to 1 during Swan's last full year as CEO in 2020.
However, a majority of the $169.5 million in stock awards Gelsinger received last year are currently worthless and will remain that way unless Intel's stock price significantly increases over the next few years. This applies to more than 60 percent of last year's stock awards, and they require Intel's stock price to increase 200 percent over a five-year period for Gelsinger to vest the full amount.
"The package requires substantial stockholder value creation in order to realize its targeted value," Intel said in its new proxy statement.
If you've been following Intel's stock movements lately, you'll know that this means Gelsinger is in for quite a challenge if he wants to cash out on all his shares. The company's stock price is currently down about 20 percent from when he started, showing that Gelsinger has plenty of work to do in convincing the company that Intel is worth much more than it currently is.
Investors did not respond well to Intel's disclosure in February that Gelsinger's costly manufacturing expansion will drag down gross margins for a few years and make Intel free cash flow negative for the first time in three decades. The day following that disclosure, Intel's shares went down 6.4 percent. Gelsinger later pointed to Wall Street's negative response as evidence that his company is worthy of receiving part of the $52 billion in US subsidies that await approval in Congress.
We should point out, as others have, that Gelsinger, an evangelical Christian, has previously said that he donates roughly half of his earnings to charity. But if Gelsinger can prove his naysayers wrong and elevate Intel to a new level in the Wall Street pantheon, his total compensation will represent an astonishing amount of money for one human being to accumulate over a relatively small period.
Compensation for Intel's other top execs
Elsewhere in Intel's new proxy statement are interesting historical artifacts thanks to the fact that four of the six top paid executives listed in the document have left the company.
This includes the recently departed CFO George Davis, General Counsel Steven Rodgers, and Client Computing Group boss Gregory Bryant. The fourth former executive on the list is Navin Shenoy, the ex-data center boss who was axed last summer (Intel made the nature of Shenoy's departure clear in the proxy statement by calling it an "involuntary termination.")
Swan, the former CEO, is also on the list, though he earned significantly less than previous years because he only served as chief executive for the first month and a half of 2021 before Gelsinger swooped in. Swan's total compensation for 2021 was $605,300, which consisted of $156,300 in base salary and $449,000 in other compensation, the majority of which came from unused vacation and sabbatical time as well as company-provided transportation.
Besides Gelsinger, the only other currently employed Intel executive on the list is Sandra Rivera, who took over Shenoy's responsibilities as general manager of the Datacenter and AI Group last summer. The division was reconfigured from the previously named Data Platform Group as part of a restructuring that was enacted by Gelsinger in mid-2021.
Here's how Intel's top executives stacked up for total pay in 2021:
|2021 Total Compensation||Sorted By Total Pay|
|Name||Salary||Bonus||Stock Awards||Option Awards||Non-Equity Incentive Pay||Change In Pension Value, Etc.||All Other Compensation||Total|
Compensation for AMD's top execs
AMD's new proxy statement revealed that its CEO, Lisa Su, earned nearly $29.5 million for 2021 total compensation. That was $2.3 million higher than the previous year, and the boost largely came from a mix of higher stock awards and non-equity incentive cash.
This put the company's CEO-to-employee pay ratio at 230 to 1, with the median AMD employee earning $128,263 in 2021. By contrast, the ratio in 2020 was 228 to 1.
The chipmaker's four other top paid executives in 2021 consisted of the following executive vice presidents: CFO Devinder Kumar, Computing and Graphics Business Group boss Rick Bergman, Chief Sales Officer Darren Grasby and CTO Mark Papermaster.
Besides Su, the listed executives with the biggest differences in pay from the previous year were Grasby, who earned $4.8 million less because of a smaller package of stock awards that was slightly offset by a higher base salary and non-incentive pay, and Papermaster, who earned $2.3 million more because of a larger stock package and a higher base salary, non-equity incentive pay and other compensation.
Here's how all AMD's top executives compared for total pay in 2021:
|2021 Total Compensation||Sorted By Total Pay|
|Name||Salary||Bonus||Stock Awards||Option Awards||Non-Equity Incentive Pay||All Other Compensation||Total|
Just for fun, we calculated the ratio of Gelsinger's total compensation in 2021 to the median pay of AMD's five top paid executives: It amounted to roughly 24.3 to 1. ®