Pat Gelsinger’s situation Intel it may be a warning to boomerang executives: even when a company takes you back and makes you CEO, the honeymoon can end in an instant.
Intel’s board of directors He announced Gelsinger’s retirement as CEO, yesterday, effective today. the company he named no successor and instead named two executives as interim co-CEOs to replace Gelsinger, a former Intel lifer who has been CEO for only three years. Intel also said Gelsinger was stepping down from the board. In other words, the company left little room for interpretation that Gelsinger was fired.
“Today is, of course, bittersweet because this company has been my life for most of my career,” Gelsinger said in a statement.
In response, Intel stock prices rose 5% in premarket trading before falling again. But that blow may be the committee’s goal, says Jo-Ellen Pozner, associate professor of management at Santa Clara University’s Leavey School of Business. Companies often choose to make such big announcements because they know Wall Street will respond favorably, he said luck It signals that the company is serious about a strategic change in direction, especially when an executive loses his or her board seat.
“When they replace a CEO, unless there’s been a major scandal or wrongdoing, they’ll keep their seat on the board, even if it’s a sort of ceremonial position,” says Pozner. “It is to recognize that they have contributed, that they are an important part of the team, but that a change is needed.”
Removing Gelsinger from the board, he added, “seems like adding insult to injury.”
Return attempt
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 leaving in 2009 to head the software company VMWare.
From the start of his CEO tenure at Intel, Gelsinger was supposed to be a comeback man. Once the category leader, Intel fell behind its competitors in cutting-edge chips. It was too late to respond before the rise of smart phones and missed the surge in demand for chips made for mobile devices. Recently, he failed to predict the AI boom and saw the competitor Nvidia seize the opportunity, and then balloon to the upside market capture $3 billion.
When Gelsinger took over as CEO, he set an ambitious plan it would take several years to realize it. Under his leadership, Intel would begin manufacturing chips and selling them to other companies. The plan needed billions, including about $20 billion in CHIPS and Science Act grants from the Biden administration. But like luck notifyIntel had little to do with that level of spending this year. Instead, its share price plummeted. In August, the company announced It would deduct 15% seeking $10 billion in cuts to its workforce and expenses. The fall was so severe Qualcomm reportedly saw Intel as a potential acquisition target.
Against this background, Gelsinger lost the trust of the board. Citing sources about the situation, Bloomberg reported that executives were frustrated with Gelsinger’s slow progress in pursuing Nvidia’s leadership. Frank Yeary, Intel’s independent chairman of the board, will now serve as interim executive chairman.
The year of expulsions
That may be cold comfort to Gelsinger, but he joins a long list of CEOs who have abruptly left their roles this year, including CVS’s Karen Lynch, Bob Bakish. Paramount Globaland Laxman Narasimhan at Starbucks.
“2024 appears to be the year many boards lose patience with CEOs,” executive consulting firm. Korn Ferry stated this fallindicating a record increase detected in the dismissals of CEOs in the first half of the year. Gelsinger is not the only leader who has been shown the door without a named successor: the same thing happened. in the peloton, Semiconductor gridand PriceSmart.
Across corporate America, boards may be rushing to respond to deep anxiety about the markets, Pozner suggests, especially in the wake of the presidential election and Trump’s plans to shake up trade policies: “There’s a lot of uncertainty about what’s going to happen. Make people happy, and people are really looking for it in all walks of life.” which has”.
“Companies may be making big changes because they’re worried about being left behind,” he added. It seems that the boards are thinking: “We’ll try something. We’d rather go down swinging than wait to be caught off guard.’
