This just in. Paul Otellini, the CEO of the world's biggest chip maker, pulled down a cool $19 million in total compensation in 2012. The total compensation was up about 9 percent compared with 2011, according to a report by the Bloomberg news service.
Otellini's base salary also rose by about 9 percent to $1.2 million. The bulk of the $19 million was made up by non-salary compensation including Otellini's bonus, stock options, stock grants, pension and other benefits.
I can hear some engineers grumbling even now. The average base salary among North American EEs totals just over $100,000, according to the most recent EE Times Salary and Opinion Survey. And it's a pretty good bet that not one of them earned as much in additional compensation as Otellini. Was Otellini's performance in 2012 worth 190 average engineers?
The pay gap between the people at the top of the org chart and the rank and file has been a hot-button issue for years on the pages of EE Times and elsewhere. We took a little deeper dive into this a few years back.
Of course, there are those who will argue that a good CEO is infinitely more valuable than a rank and file engineer. Or even 190 of them. No matter where you stand on this issue, you have to acknowledge there is some truth to that. You can have hundreds of the best engineers in the world, but if no one is steering the ship the company is not going to succeed.
Don't forget, Otellini is famously not even an engineer (the first Intel CEO to hold that distinction). He's an MBA. He's paid by Intel's shareholders to protect and grow their investment. Investors don't necessarily care about Intel's industry leading process technology, tri-gates, 22-nm, or Sandy Bridge. They care more about the value of their investment. Just for the sake of discussion, Intel's stock price closed 2011 at $24.25 and was down to $20.62 by the end of 2012.
I think we can all agree that the CEO ought to be paid more than the average employee at a firm. Otherwise, who'd want the job? But things do appear to be tilted pretty far out of whack.
First let me say that I'd be the last to grumble about our six-figure salaries. And I also think that the owner of a company ought to be able to pay the employers whatever he wants. But that's the problem. I'm an owner of Intel, and my ability to influence pay is very weak. I would not pay my employee $19m and I don't believe I get better performance for $19m than I would for $1m. I'd vote to put the bulk of that in dividends.
There are lots of arguments in favor of high CEO salaries, none of which I buy.
One is that if you DON'T pay $19 million, the CEO will go somewhere else where he/she will be paid such an amount.
But hang on, Otellini is retiring early!!!!
Intel had its fling with an Economist / MBA as CEO and has had a dismal outcome. Its time to "GET SMART", preferably someone with the technical confidence ( backed by track rcoord ) to marshal Intel's fast eroding Fab lead into winning new architectures.
I hear that average pay raise for rank and file employee is 1% this year, which is normally 2-2.5%. So a base salary raise of 9% for an outgoing failed CEO and t-comp of 19M doesn't make sense. Just another evidence that the "suits" have come to roost at Intel and are simply raiding the company.
As I recall Paul Otellini more than doubled Intel's sales while maintaining a very healthy bottom line -- and increasing Intel's market share and process technology lead. Hardly a bad record.
The only criticism I might have is that he realized the ultimate impact of smart phones & tablets on the PC industry a couple of years later than he should have. To his credit, the threat was finally recognized and steps taken to address it. Was it just in time or too little too late? We don't know yet.
Discussion of MBA vs Engineer is ludicrous - by the time any individual becomes CEO of a major multinational corporation they have been organizational managers and business decision makers much longer than they ever were contributing engineers, accountants, etc.
My guess is that Paul Otellini knows more about 22nm process technology and CPU architecture than 99% of the readers of this blog... Does that make him a good CEO or a bad one?
Finally - if the question is could Intel get the same quality CEO for $1M/year, probably not. $10M/year, maybe. Even in the CEO position the free market works. If another company was willing to pay that $1M CEO $5M - why would he stay at Intel?
BTW - If you owned a business, would you hesitate to pay 0.03% of your sales to get the best person possible to run it for you???
No, you are absolutely dead wrong. Your logic is fundamentally fraud. If money becomes the key mechanism to keep a talent people, a business establishment can easily beat the competition by letting them to spend all the money to feed the "fat captain" to steer a ship with rank & file bearing no royalty and their own mindset that are not aligned to those of the fat captain!
Remember, while a ship needs someone to steer, it cannot move without the hundreds and thousands of rank & file to physically move the paddles in the same direction. The most important assets of a company is not the CEO, but the rank & file who are dedicated and equally committed to paddle in the same direction! Look at USA of today, there is no longer the amount of fundamental research which gave us the internet of today. Instead, a lot of money go to the CEOs and VPs, the R&D Dept of most companies in USA are left with crumbs. HP is a perfect example. HP Way had been turned into the Board Way or the CEO Way. Pretty much every rank & file is disposable. Worst still, many didn't get any pay rise for the past many years! If thinkings like yours do not got thrown out sooner, USA will risk being at the bottom of the global ranking by the end of this millennium.
"Was Otellini's performance in 2012 worth 190 average engineers?
Don't forget, Otellini is famously not even an engineer (the first Intel CEO to hold that distinction)"
What a narrow tunnel vision
"Don't forget, Otellini is famously not even an engineer (the first Intel CEO to hold that distinction). He's an MBA. He's paid by Intel's shareholders to protect and grow their investment. Investors don't necessarily care about Intel's industry leading process technology, tri-gates, 22-nm, or Sandy Bridge. They care more about the value of their investment. Just for the sake of discussion, Intel's stock price closed 2011 at $24.25 and was down to $20.62 by the end of 2012."
Maybe Intel should hire NVDA CEO - the guy has an engineering degree but seems to lack people skills calling TSMC (NVDA's manufacturing partner) 20nm process absolutely worthless - yeah and check out NVDA stock price performance....
and he seems to care about Intels TriGates and manufacturing capabilities...
"Nvidia Wants to Make its Chips Inside Intel's Factories"
"I think we can all agree that the CEO ought to be paid more than the average employee at a firm. Otherwise, who'd want the job? But things do appear to be tilted pretty far out of whack."
I volunteer to be the CEO of any major corporation for free. Heck, I will pay for the priveledge. The knowledge and connections I would build in the C-suite there would translate into super pay somewhere else in the future.
I think the income of CEOs of major corporations is shameful. I very much doubt that you'd have any trouble finding good ones, if their salaries and other income were cut to 1/10th of what it is now. The problem is that these top execs sit on each others' boards, and incestuously vote up their ludicrous salaries and benefits.
Their main job description is to hustle business, however, a job I would hate. Just like university presidents are hustlers and not educators, the prime concern of these top corporation CEOs is shareholder value. Not cutting edge engineering per se, not products they can be proud of, not even long-term success. Just a good stock value now. If there's any "steering the ship" that they really do, it's only to that end, near term.
I very much doubt they are worth 200 engineers. But on the other hand, at large companies where they make these ludicrous incomes, 200 engineers is a very small fraction of the work force. So the way I see it, the scandalous salaries are more of an annoyance than anything else.
I will give kudos to Otellini for one Intel direction.
He Kept Intel Fabs mainly in the USA. While most greedy CEO’s have driven the semiconductor industry overseas. Anyone ever count the Fabs in the USA 25 years ago and the FABs in the USA now ?
Intel is one of the few that continues to invest in the USA.
Outside of that, the direction provided by Otellini is average at best and his salary should have reflected it.
..People in power take care of themselves… that is the bottom line.. That is the way it has been and the way it will be.
Of course Tim Cook, CEO at Apple, makes a whole lot more money so it's all relative I guess. In some sense 19 million for the CEO of a comapny with over 50 billion in sales is not out of line. At least Intel is actually making something and directly and indirectly employs well over 100,000 people. My beef is with the exorbitant salaries of hedge fund managers and CEOs in the financial services industry.
dont worry all, this ll be fair in the end.
He can 't eat all 19million anyway.
He can eat maybe 500$ per day, use $100 gas per day, 100$ electricity, water...
He will leave 18million to the rest of world when he die....
I disagree with the "Who'd want the job?" concept. If Otelini only made 2x what the normal engineer made, many people would still want that role. It's not the salary so much as the prestige and power. Having 80k employees work under you would make anyone feel important.
I worked under him for a year earning approximately 1/2 percent of what he makes. I was on call 24/7 every 3rd week and it was the most mindnumbingly stressful and horrible experience every 3 weeks. This was working in PTD on their leading edge process, the tech that actually makes Intel, well Intel. If Mr. Otelini actually gave a crap about his engineers, he could have cut his pay and hire more people so his top engineers would not have to have no sleep every 3rd week babysitting his R&D modules.
The money has to come from somewhere and Mr Otelini costs 190 engineers, the rest of his executive staff costs another several hundred combined, yet his actual engineers sacrifice their work life balance because there is "no money" to hire more people.
All of the comments are well taken but non have the ultimate impact of RobDinsmore, a person who has a taste for who really pays Otelini's salary. In the case of elite atheletes, the differentiation between great and commonplace are easily measured. Unfortunately, a CEO can be wildly successful in spite of himself by having a great workforce beneath him. A workforce that he had absolutely nothing to do with putting in place. Perhaps it's time for an engineer's union ;-)
It was a BIG mistake to have hired a non Engineer as the CEO of Intel, he could neither anticipate market shifts nor re-direct Intel to take advantage of. No doubt he was able to maintain Intel x86 sales during the Great Recession using various business tactics ( and pretty much drove AMD out of the game ) but failed to switch Intel to the faster growing Mobile business. Not having the Tech cred. himself he kept following the path set by his Engineer predecessors at Intel, i,e. keep pushing on new Transistor technologies and ever bigger Fabs that was no longer relevant but did nothing on developing new chip designs that can win against ARM.
The next CEO at Intel should be able to quickly marshal Intel's process technology lead ( TSMC closing in ) into new architectures that can outdo ARM yet still run x86 software.
No complains. We spend significant time on IMBO and R&R. who cares if we are loosing market share. We have a good process to get there. More over we had many many meetings to comeup with stratergies to get into cellphone markets...stay tuneed for another spin beyond FINFET.
I don't have a problem with CEOs being paid well. I do have a problem with them getting millions of $ when they get fired. Since the stock price dropped over the year, his stock options weren't worth as much, but when you don't pay for the stock to begin with, you still walk away with a lot of money.