Friday, December 20th 2024
Intel Ex-CEO Pat Gelsinger and Current Co-CEO David Zinsner Face Shareholder Lawsuit Over Foundry Services Claims
A significant legal challenge has emerged for Intel's leadership as shareholders aim for the company's representation of its foundry business performance. LR Trust has filed a lawsuit against former CEO Pat Gelsinger and current co-CEO David Zinsner, seeking to return substantial executive compensation amid allegations of misleading statements and financial mismanagement. The lawsuit centers on Intel Foundry Services (IFS), a division that was once positioned as a crucial growth engine for Team Blue. The Intel Foundry, as it is now called, is here referred as Intel Foundry Services, which was its older name back in 2023. According to court documents, LR Trust claims that while Intel's leadership painted an optimistic picture of IFS's trajectory, the division struggled to attract major clients and accumulated significant losses. Gelsinger's $207 million compensation package is at the heart of the dispute, where shareholders now demand that these funds should be returned to the company.
The legal action also targets additional compensation received by Zinsner, arguing that executive rewards were secured through misrepresenting the company's financial health. The allegations point to a troubled 2023, during which Intel's chip production unit reportedly lost $7 billion. These challenges extended into 2024, as increased investments in new fab facilities further strained the company's finances. The lawsuit alleges that executives issued "materially false and misleading" statements regarding cost savings and revenue potential, ultimately driving shareholder value to the very bottom. LR Trust's legal filing accuses Intel's leadership of breaching its financial duties through inadequate internal controls and inaccurate financial disclosures. Beyond seeking the return of executive compensation, the lawsuit pursues damages and legal cost reimbursement, with any recovered funds potentially being returned to Intel's coffers. Intel has yet to respond formally to these allegations. This is just another lawsuit in line as Intel already has several other lawsuits going on, with one recent from August.
Sources:
Court Lawsuit Document, via Tom's Hardware, Thanks TumbleGeorge for the tip!
The legal action also targets additional compensation received by Zinsner, arguing that executive rewards were secured through misrepresenting the company's financial health. The allegations point to a troubled 2023, during which Intel's chip production unit reportedly lost $7 billion. These challenges extended into 2024, as increased investments in new fab facilities further strained the company's finances. The lawsuit alleges that executives issued "materially false and misleading" statements regarding cost savings and revenue potential, ultimately driving shareholder value to the very bottom. LR Trust's legal filing accuses Intel's leadership of breaching its financial duties through inadequate internal controls and inaccurate financial disclosures. Beyond seeking the return of executive compensation, the lawsuit pursues damages and legal cost reimbursement, with any recovered funds potentially being returned to Intel's coffers. Intel has yet to respond formally to these allegations. This is just another lawsuit in line as Intel already has several other lawsuits going on, with one recent from August.
16 Comments on Intel Ex-CEO Pat Gelsinger and Current Co-CEO David Zinsner Face Shareholder Lawsuit Over Foundry Services Claims
Their stock tanked by almost 50% at the foundry performance news, so for sure the truth about the foundries was hidden from the investors until the last second by management -- I would imagine there's a case here. I'm a little surprised there aren't more of these, given how badly Intel management has performed on virtually all fronts.
In other words, management has a duty to be clear and honest with the shareholders (usually as per their contract), and to conduct themselves in the best interest of the company (also typically as per their contract) -- that duty was breached, and that breach caused material damages.
It's a civil case about money/damages, nothing illegal.
Most of these guys have umbrella insurance policies for millions to protect themselves. A million dollar policy is only like $100 a month.
Sorry, but now that I've stopped ROTFLMAO, I can tell you:
A) Good luck with that
B) Nevar gonna happen
C) Only in your wildest friggin dreams
The shareholders can demand anything they want, but that money is long, long, long gone, stashed away in some foreign country's banks, where the US has no jurisdiction or treaties with.
If the insurance doesn't cover whatever the judgements might be, then oh well, they'll just have to take what they get & be happy....MINUS the gazillions in lawyer's fees, of course, which the claimants will have to pay if they lose, which is highly likely without any "smoking gun" evidence or eye-witness testimonies :)
All things aside, to get 200 mln compensation while taking a dump is hard to beat
Same story on Arrow Lake: If anyone really thought that they just mere weeks before the very launch (sic!) would shift ARL to TSMC, he has to be mental. That is not possible, it was a goddamn lie!
Since such a shift to TSMC would've to have been under way already months prior to that, especially for a launch-windows only weeks later – Mind the double-wammy of shipping and circulation back to Intel for packaging on their own 22nm base-tile interposer. So by the time they announced they'd knife their own 20A and consequently redirect ARL to TSMC, ARL was and had to be in production at TSMC already for months for the very launch in October. Ergo, all their virtue signalling was a barefaced lie to begin with and 20A was already dead months prior to that.
That's just a single and one of the most recent patently and material misleading statements, as these were blatant lies which are quite lawfully tangible.