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Intel's CEO Just Sold a Lot of Stock (fool.com)
100 points by endymi0n 8 months ago | hide | past | web | favorite | 54 comments



Is it simply part of a regular sales plan? When I was at Intel, any execs that were classified as insiders had such narrow windows when sales were legal, and were under such scrutiny, that they often set up a stock sales calendar to allow sane divestiture of their option-based compensation. There is no meaning to be read into a fixed schedule.


The interesting part is that he's only keeping the bare number of shares that he is required to keep. This suggests that he'd likely be 0% invested in the company (i.e. holding 0 shares) if he had the chance to, meanwhile he continues to try to persuade employees to retain Intel stock to "stay invested in the company."


Staying invested in the company and locking your financial future to it are very different things - diversification is ~almost always a good/sane thing to do. Personally, I tend to sell all of my employers stock when I get it and diversify, though I keep 1 share to 'stay invested'.


Keeping the bare minimum number of shares, is he? And that's a bad thing? Well, tell me the number of pieces of flair, err, I mean shares he should hold to be acceptable. Kidding aside, the article did read as hunting for something to make out of this. I mean, if he holds the minimum number of shares that company requires of a CEO, that's $11 million. Just how many of his eggs does he need to keep in that one basket?


  Just how many of his eggs does he
  need to keep in that one basket?
Many executives receive very high total compensation, but structure it in a certain way as a sort of fig leaf to pretend it's in the shareholder's interests.

For example, instead of being paid $12,000,000 a CEO might pay themselves $2,000,000 in cash and award themselves $10,000,000 in stock. The fig leaf in that case is that it aligns his incentives with those of shareholders. There's totally not a principal-agent problem here, honest!

Selling all $10,000,000 of shares kinda reveals that fig leaf for what it is: giving himself the shares was never about aligning his incentives with shareholders - he just wanted the cash.

If shareholders' interests were represented competently and in good faith, you'd expect a very different incentive structure.


Doesn't the board of directors usually set the CEO's compensation, not the CEO him/herself?

Also, I don't think the stock is a "fig leaf" -- it actually is in the shareholder's interests that CEOs hold a lot of stock. I can't think of any other explanation why the compensation of (non-founder) CEOs is so high. I suspect that if a CEO were to refuse to accept stock it would make shareholders uncomfortable. The stock is what incentivizes the CEO to act in the interest of shareholders when those are contrary to the interests of employees or customers.


> Doesn't the board of directors usually set the CEO's compensation, not the CEO him/herself?

My understanding is that the board is just other executives and CxO from peer companies. Think Eric Schmidt on the Apple Board or the disgraced Citi CEO John Thank on Uber's board. Neither of them represent our desire to minimize executive pay.


> I can't think of any other explanation why the compensation of (non-founder) CEOs is so high.

Really? Have you tried?

As a thought experiment, imagine (just hypothetically, of course) that companies were mostly run by grasping plutocrats, and members of the same group of greedy plutocrats sat on the boards of their friends' companies, and set their compensation.


  it actually is in the shareholder's
  interests that CEOs hold a lot of stock
Absolutely. So why do they let him sell it?


Because stock often makes up most of a CEOs compensation. Most people wouldn't want to have their pay locked up for long periods of time somewhere they can't spend it. So, companies like Intel can set up some agreement that says they can sell some of it as long as they keep some minimum amount.


> Selling all $10,000,000 of shares kinda reveals that fig leaf for what it is: giving himself the shares was never about aligning his incentives with shareholders - he just wanted the cash.

And the low tax burden. The capital gains tax rate on those shares are 20% while if it was income, it would be taxed at 39.6% fed + whatever the state/city taxes are.

> If shareholders' interests were represented competently and in good faith, you'd expect a very different incentive structure.

The execs interests align with short term shareholders. Not the long term shareholders. It essentially fosters a pump-and-dump environment.


Selling all $10,000,000 of shares kinda reveals that fig leaf for what it is: giving himself the shares was never about aligning his incentives with shareholders - he just wanted the cash.

That right there is the money quote for me that invalids my "pieces of flair" metaphor. You're right, the very best thing one might say about flipping the shares for cash is it's a bit crass; at best.


>If shareholders' interests were represented competently and in good faith, you'd expect a very different incentive structure.

I'm curious, what is the very different compensation structure you'd propose?


If you're curious then you'd enjoy reading "Pay without Performance: The Unfulfilled Promise of Executive Compensation" https://www.amazon.com/Pay-Without-Performance-Unfulfilled-C...


Looks interesting, thanks! Could you summarize briefly what you were referring to in the parent comment, though? I'm not sure when I'll get a chance to read the book.


The CEO is allowed to do as he does, but actions have consequences.

He knows what it means to cut down to bare minimum, and this could be considered a signal that he feels he could get more than the forecasted % elsewhere, and that he doesn't feel holding on to the stock is worth the negative backlash that is sure to happen with such a move.


> He knows what it means to cut down to bare minimum, and this could be considered a signal that he feels he could get more than the forecasted % elsewhere, and that he doesn't feel holding on to the stock is worth the negative backlash that is sure to happen with such a move.

Possibly. But it's possible that he did it on the assumption that US tech stocks are already overvalued and anticipates a correction soon.

Yes, he likely isn't "all in" on Intel stock right now, but does that necessarily mean that it's specifically Intel that he thinks has problems?


His action is telling all shareholders to sell Intel stock because it's overvalued. Maybe not Intel specific, but it's Intel inclusive.


Or he's buying a new yacht.


Why not simply investments that he happens to believe are better values than Intel stock?

Or is he expected to believe that Intel shares are in fact so undervalued that they represent the best investment he could possibly make? Or to voluntarily maintain investments in what he believes is a comparatively suboptimal vehicle merely to "take one for the team"?

In other words, why would one expect, let alone demand, a CEO to make what he believes are poor financial decisions in his personal life?

As for being "invested in the company", once you reach the level of Fortune 50 CEO, the concept is basically nonsense: practically speaking, no matter how poorly you invest or perform, barring criminal prosecution, you'll still end up financially better off than nearly everyone else in the world, including many, if not all, of your peers.


It depends on how much faith you put in the CEO. If you want to see him with a lot of skin in the game, then you'll probably want to sell your shares now. If you're basing ownership off some other values (projected growth, P/E ratio, whatever), then maybe it's fine to hold on to your shares.


Could be related to [1]?

[1] https://news.ycombinator.com/item?id=16052451


Obviously not. What could an unfixable CPU design bug that will impact every Intel processor (and cost up to 30% performance through the neccessary fixes) possibly do to the companies‘ stock price? /s


This "bug" is so blown out of proportion it's sickening. It breaks KASLR, a thing no one uses.


Except everyone that runs kernel 4.12 and onwards, where it was enabled by default and many distributions have had KASLR enabled earlier.

Also, it doesn't just affect KASLR. KASLR isn't even the concern here. Based on the info that is available/has been pieced together, it appears to be a bug, at the hardware desing level, in Intel CPUs speculative execution capabilities.


Wrong. Wrong. Wrong. Sigh.

This bug allows a user level process or even a website to read any memory on the pc, including memory of another vm on the same box.

Bitcoin wallets, passwords, keys, all up for grabs by anon.

Can't be fixed by intel so all os providers have to implement fixes in os which slow down pc by approx 30%.

So you gaming pc or aws instances just cost more


There are many reasons to just get a dedicated machine, especially given that they're like $10/month these days. (kimsufi, hetzner, ...)

This is a major one. On a dedicated box, as long as ssh and your http server are secure, you can run a compromised kernel. In practice, of course, it mostly means that there's an extra layer of exploit necessary before attackers are in. Everybody should insist on that, always.

Performance is another one (to put things bluntly: a 2-year-old atom with 4G straight on hardware, on 99% performance, beats a Quad Xeon with 96 Gigs of ram where you're 1 out of 100 VMs. And even that undersells it. In practice on that quad xeon it will regularly take 1s to jump into your code for a web request. Not generating a response, just the time before it actually processes your packet. If you're I/O bound (ie. every single website), the lowly dedicated Atom will beat the big bad Xeon).

And lastly, included network capacity is the third one. The cheapest dedicated on hetzner comes with $3000 worth of network (Google cloud prices, Amazon's are more expensive, and yes it's FUP bandwidth, so presumably you can use like $500 of it without problems if you're paying $10, not the full $3k)


You're likely incorrect. It now looks like a speculative execution exploit/leak. We don't know what the bug is exactly.


An executive trading on inside information of this sort would be instantly crucified.. pretty sure it's unrelated


If there's no official embargo, is it really secret enough to be considered insider trading? I mean a lot of people know what the secret is by now. And that blog post showed how much info is widely available even with the embargo in place.


I think people waste a lot of money betting on the significance of CEO sales.


Real estate company CEOs selling their own stock was a canary for the 2007 crisis. Insider selling their own stock is often a tell-tale sign of the top of the market.


Is it a canary or a noisy red flag (too noisy to be useful) if the signal has a really high false positive activation rate?


A single insider is a noisy signal. A pattern of insiders is the red flag.


I had to climb down Intel's management pecking tree for a technical issue, and it was eye opening. I passed through 6 layers of management to reach 1 engineer.

Worst part of that was the management sucked up to me when an SVP was copied on the email, and low-key ignored me when she wasn't.

This political cesspool cannot compete effectively against driven companies like NVidia. Intel seems to be the new Blackberry.


Yeah, with how much people talk about diversity being important in investment I'm surprised selling stock is ever news. Also with all the regulation and scrutiny around them selling stocks it makes it even less likely that it actually means anything at all.


Exactly, this is a logical move to rebalance his net worth outside of Intel. Otherwise he's got a whole lot of eggs (including his career) in one basket.


So he’s the CEO who knows the most intimate details about his company, including what the next few years hold. If as CEO he’s not confident enough to have a whole lot of eggs in the company that HE is running, why would anyone in their right mind want to have a single egg in this company?


I don't follow this logic.

Different investors have different risk appetites.

If in your mind, the CEO sells one share of the company's stock and all of the investors should sell that stock, I think it would be a fantastic time to buy into the stock.


I think holding the minimum amount of stock, as he is doing, is a far cry from selling one share. I understand you can’t buy stuff to live with stock, so he’ll need to sell some, but there’s a big difference between selling some and selling the maximum you’re allowed to at every opportunity.


Correct, if he needed some cash freed up immediately he should cash out shares of an investment fund, not dump shares of the company he's CEO of.

And while the technical issue discussed elsewhere may play a role in people's minds, keep in mind that if it's only the CEO dumping stock he might be cashing out ahead of a #metoo


I think it's very difficult to understand everything happening at every level in such a large company, even for the CEO. Many random things could happen that would cause the stock to drop not directly affected by the CEO.


Also maybe he wants a new home.


Even if he thinks the company will do well, selling at the PE multiple the market is giving now probably makes sense.


Doesn't this make sense? Sell the shares now. If he does well over the next 3 years, he will be rewarded with more stock grants. If he does poorly, he will probably be out of a job but at least he has the money from this sale (and much more, I'm sure)


Really suspicious timing in light of today's announcement.


A $60 price in 2021 is about 7% growth per year which is about average for the market as a whole over the past 50ish years, but significantly lower than current market growth and especially current tech sector growth. Still, it looks pretty terrible as CEO to be dumping every last share you're allowed to.


Nothing to do with this then? https://forums.theregister.co.uk/forum/1/2018/01/02/intel_cp...

I imagine Apple's lawyers will be sharpening their knives, considering how deeply they're in with Intel. This is going to cost Intel dearly... and will surely affect the share price, regardless of the actual threat it poses.


The article is a week old, and so predates the public disclosure of the bugs. He knew what was coming.


If you lose anything because of the bug, find a good lawyer. I'm sure there are a few that would love to go after this CEO's billions. He should pay because he was paid a lot to run Intel right, and didn't.


He knew and he sold shares ahead of everyone else. Why is this legal?


Smart. INTC is at a 15+ year high in a huge bull market. Just makes sense to shave some off.


These guys can dump their shares whenever they want, secretly, via private contracts. Pointless trying to read anything into public data.


That's illegal and expensive id discovered




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