Outgoing Intel CEO Pat Gelsinger is experiencing a nightmare exit including stock market approval and no succession plan

Outgoing Intel CEO Pat Gelsinger is experiencing a nightmare exit including stock market approval and no succession plan

Pat Gelsinger’s predicament at Intel could be a warning to boomerang executives: Even if a company wins you back and makes you CEO, the honeymoon can end in a flash.

Intel’s board of directors announced Gelsinger’s resignation as CEO yesterday and today. The company did not name a successor and instead named two executives as interim co-CEOs to replace Gelsinger, a former Intel employee who has been CEO for just three years. Intel also said Gelsinger would step down from the board. In other words, the company left little room for the interpretation that Gelsinger was ousted.

“Today is, of course, bittersweet, as this company has shaped my life for most of my professional career,” Gelsinger said in a statement.

In response, Intel’s shares shot up 5% in premarket trading before slipping again. But that increase may have been the board’s goal, says Jo-Ellen Pozner, a professor of organizational theory and management at the Haas School of Business at the University of California, Berkeley. Companies often decide to make big statements like this because they know Wall Street will react positively, she says Assets. This is a signal that the company is serious about a strategic change in direction, especially if an executive also loses his board seat.

“If a CEO is replaced and there has been no major scandal or suggestion of misconduct, he or she retains his or her seat on the board, even if it is some sort of ceremonial position,” Pozner says. “It is a recognition that they have made a contribution, that they are an important part of the team, but that a change is needed.”

Removing Gelsinger from the board, she added, “seems to add insult to injury.”

Attempted U-turn

Gelsinger’s sudden departure was unexpected given his history with the company. He began his career at Intel in the 1980s and spent decades there before taking the helm at software company VMWare in 2009.

From the beginning of his tenure as CEO at Intel, Gelsinger was destined to be a turnaround man. Once an industry leader, Intel fell behind its competitors in cutting-edge chips. Until now, people had reacted too late to the rise of smartphones and missed an increase in demand for chips for mobile devices. More recently, the company failed to predict the AI ​​boom and watched as competitor Nvidia seized the opportunity and then reached a market cap of over $3 trillion.

When Gelsinger took over as CEO, he laid out an ambitious plan that would take several years to implement. Under his leadership, Intel began making chips and selling them to other companies. The plan required billions, including about $20 billion in subsidies from the Biden administration’s CHIPS and Science Acts. But how Assets Intel reportedly had little to show for that level of spending this year. Instead, the stock price plummeted. In August, the company announced it would lay off 15% of its staff and seek $10 billion in spending cuts. The crash was so severe that Qualcomm reportedly viewed Intel as a potential takeover target.

Against this background, Gelsinger lost the trust of the board. Citing sources familiar with the situation, Bloomberg reported that directors were frustrated by Gelsinger’s slow progress in pursuing Nvidia’s lead. Frank Yeary, an independent Intel chairman, will now serve as interim chairman.

A year full of disempowerment

It may be small consolation for Gelsinger, but he joins a long list of CEOs who have abruptly left their positions this year, including Karen Lynch at CVS, Bob Bakish at Paramount Global and Laxman Narasimhan at Starbucks.

“It appears that 2024 is a year in which many boards have lost patience with CEOs,” management consultancy Korn Ferry noted this fall, citing a record increase in CEO firings in the first half of the year. Gelsinger isn’t the only leader to be left without a named successor: The same was true for Peloton, Lattice Semiconductor and PriceSmart.

Across America, corporate boards may be reacting prematurely to deep concerns about markets, Pozner suggests, especially after the presidential election and Trump’s plans to overhaul trade policy: “There’s just a lot of uncertainty about what’s going to happen to make people happy.” and what people in all walks of life are really looking for.”

“Companies may make big swings because they fear falling behind,” she adds. The committees seem to think, ‘We’ll try something.’ We’d rather go down swinging than wait to be caught unprepared.”

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