Intel Shareholder Sues Former CEO for Mismanagement, Demands Return of $207M Salary
Brook.X
Intel has been in the headlines recently for a series of major events, including a substantial loss in certain business segments revealed in their financial reports, and the retirement of former CEO Pat Gelsinger. Currently, Intel is led by two executives serving as Co-CEOs.
However, Gelsinger's retirement seems to be anything but peaceful. Intel shareholder LR TRUST has filed a lawsuit against both Gelsinger and David Zinsner, another Intel executive who is one of the current Co-CEOs. The lawsuit demands the return of the $207 million salary Gelsinger earned during his tenure from 2021 to 2023.
LR TRUST alleges that Intel's management, including Gelsinger, demonstrated poor management and misleading disclosures.
Intel shareholder sues former CEO Pat Gelsinger for mismanagement, seeking to reclaim $207 million salary
In its lawsuit, LR TRUST states:
Gelsinger and Zinsner failed to convey the poor performance of Intel's foundry division, which has been consistently losing money and struggling to attract significant interest from fabless design companies.
Intel failed to disclose key risks in its 2024 proxy statement, and Intel executives and board members allowed misleading representations about the growth potential of Intel's foundry services to be made, thus concealing huge operational losses and internal revenue declines.
Intel misrepresented the financial status and performance of its foundry division, making significant false and misleading public statements about cost savings, operational efficiency, and the profitability of the foundry division. The foundry division alone lost $7 billion in 2023, and with Intel's investment expenditures on new foundries, the loss will magnify in 2024.
LR TRUST accuses Gelsinger and Zinsner of collecting substantial remuneration during periods of poor management and financial inaccuracies, including salary, stock awards, and bonuses. LR TRUST seeks compensatory and punitive damages, with the defendants bearing the cost of litigation.
From 2021 to 2023, Gelsinger received $207 million in compensation from Intel, excluding other rewards such as severance packages. If LR TRUST wins the lawsuit, this money would not be paid directly to LR TRUST but would be returned to Intel as compensation for losses.
