It is sad to see a technological stalwart like Intel reduced to the state that it is now - directionless and hiving off parts of itself to keep either the process or the processor at its core alive. Taking a look at its board of directors, 6 of its 12 directors have been on the board for less than 5 years. Of the 5 that have been with the company long enough to be responsible for its direction, one has antecedents from VC land, two are from the medical devices field, one is a dean at Berkeley and one is from Boeing. The last one is the CEO. While they all seem distinguished on paper, let's parse through them a little bit.
Medical devices are embedded systems - with microcontrollers, tiny memories and proprietary OSes. Such a market is best served by NXP / ST-Micro. Someone with that experience may not be the best to set the direction for high performance computing, ADAS or FPGAs. The VC guy seems to have led a tiny, nondescript SW company before joining Intel's board of directors. The Boeing guy is a finance guy and his experience should be valuable at these times, unless his time did not overlap with Alan Mullaly. The dean seems to be a great asset to provide direction to the process side of the business. Of all the directors, it seems only one - Barbara Novick appears to have exactly what the company needs. Her company (BlackRock) is one of the main investors and she's herself eminently qualified.
The rest of the board of directors' careers or income do not depend on the company's performance, so the headless meandering of Intel comes as no surprise to me. Others have written about this before [1, 2].
I'm wondering how INTC's other institutional investor Goliaths like Vanguard, State Street Corp, etc. will handle this situation since there's no public evidence of a proxy fight. It appears as if institutional investors were hardly concerned about Intel's stock performance all these years. The HBR says [3] that only 17% of board changes happen with proxy fights (dated data), and that too when hedge funds are involved, so I think this slate of directors will be the ones driving the company aground.
One might say that a well functioning board needs to have independent directors. There's plenty of evidence available to counter that. And who has the time to make a well researched argument when all my searches will have algorithmic responses that strengthen my bias anyway.
I firmly believe that a new corporate structure for companies is needed. Here are my suggestions that still stay true to the legal requirement that the board acts in the best interests of the investors:
- The board must be made of representatives of the key investors. Investors must commit to hold their shares for 5 years to discourage short-sales.
- The 5 year period for major shareholders should be offset by 1 year, to emulate a bond-ladder kind of approach.
- Market-wide events must also have repercussions in terms of a change of the board-of-directors.
- The board must attend employee all-hands meetings and answer open-mic questions.
- Layoffs must have consequences - at both the board of directors level and at the company executive management level. This will discourage hire-and-fire and encourage more investment in employee training.
- An employee representative must be at every board of directors' meeting. This could be a rotating position at a certain title so that the board hears a diversity of voices.
Further reading
1. https://www.linkedin.com/pulse/go-hard-home-why-board-directors-need-have-skin-game-kylie-hammond/
2. https://www.reuters.com/breakingviews/european-boards-have-too-little-skin-game-2024-07-17/
3. https://corpgov.law.harvard.edu/2021/06/11/the-directors-guide-to-shareholder-activism
