Lip-Bu Tan’s High-Stakes Gamble to Revive Intel
Intel Corporation’s (NASDAQ: INTC) new CEO, Lip-Bu Tan, is making headlines with an audacious compensation deal that ties his pay directly to the company’s stock performance. In a rare and bold move reminiscent of private equity playbooks, Tan has agreed to personally invest $25 million of his own money into Intel stock—while facing the risk of earning nothing if he fails to deliver.
If Tan executes a stunning turnaround and smashes performance goals, he stands to gain a massive $400 million pay package, according to an analysis by Farient Advisors. However, the path to that payday requires nothing short of a colossal transformation of Intel’s fortunes.
Tan’s Deal: High Risks, Sky-High Rewards
Tan’s pay package is designed to align his interests directly with shareholders, making it one of the most aggressive CEO compensation plans in the tech industry. Key elements of the deal include:
- $25 Million Personal Investment: Within his first 30 days, Tan must invest $25 million of his own capital in Intel stock and hold it for five years—ensuring he has personal skin in the game.
- No Performance, No Pay: If Intel’s stock price stagnates or declines, Tan will forfeit his grants and lose his own money.
- Stock Price Multipliers: To unlock the full pay package, Tan needs to more than triple Intel’s stock price, pushing it from the current $26 range to around $70—levels not seen since 2000.
- Potential for $400M Payout: If he hits every target, Tan could earn over $400 million, a figure based on equity awards, stock options, and performance stock units (PSUs).
Intel’s Market Cap Could Surge by $208 Billion
To achieve the maximum payout, Intel’s market capitalization would need to skyrocket by $208 billion, reaching $312 billion. This would represent a staggering leap from the company’s current valuation, rewarding shareholders with massive gains.
The Anatomy of Tan’s Compensation Plan
Farient Advisors’ breakdown of Tan’s pay package reveals several key components:
- Base Salary and Bonus: Tan receives a $1 million base salary and a $2 million target bonus annually.
- Sign-On Grants:
- $17 million in performance stock units (PSUs), which only vest if Intel’s stock doubles and beats the S&P 500’s performance.
- $25 million in stock options, split into five tranches over five years. In a tripled-stock-price scenario, the options could yield $127 million.
- Annual Awards:
- $14.4 million in PSUs, which could be worth $86 million if Intel meets maximum stock price and shareholder return targets.
- $9.6 million in stock options, which could be exercised at $42 million under the maximum performance scenario.
Big Expectations, Bigger Challenges
Tan’s task is monumental. Intel’s stock has lost more than half its value since December 2023, despite a 10% rally following his appointment. The chip giant is at a strategic crossroads, facing mounting competition from NVIDIA (NVDA), AMD (AMD), and TSMC.
Corporate governance expert Jason Schloetzer described Intel’s five-year vesting plan as “unusually aggressive,” highlighting the long timeline and high hurdles as a reflection of the board’s demand for sustainable growth.
Shareholders Stand to Gain Big—Or Watch Tan Burn
The stakes couldn’t be higher. If Tan succeeds, Intel shareholders could see their investment value skyrocket, reaching multi-decade highs. However, if the turnaround falters, Tan risks walking away with zero payout—losing both his grants and personal investment.
As Intel aims to catch up or leapfrog competitors in the AI and semiconductor race, Tan’s compensation plan sends a clear message: no results, no rewards.
