SAN JOSE, Calif. – Advanced Micro Devices cut Dirk Meyer a $12 million severance check when it showed him the door after two and a half years as chief executive. That's not a record but clearly hits the high end of recent golden parachute payments in the semiconductor industry.
AMD revealed the $12 million pay out in a quarterly conference call today. Acting chief executive Thomas Seifert had little to say about the rationale for letting Meyer go despite several questions on the topic.
Separate reports pegged Meyer's severance package in cash payments and stock at anywhere from $8.55 million to $18 million. Before leading the company, Meyer was a top engineering manager at AMD behind its Opteron processors that drove a comeback for the company.
In a prepared statement, Seifert thanked Meyer for his efforts that left AMD a "stronger, nimbler" company. A search committee has retained an executive search firm and "we don’t plan on communicating further until the search process is concluded," he added.
Several financial analysts questioned Seifert on why the board let Meyer go, pointing to press reports about disappointment AMD was not taking advantage of the rise of tablets like the Apple iPad.
"We talked about [the need for] picking up the pace for the company and improving profitability in a more aggressive manner--to reduce it to a tablet statement would be wrong," said Seifert.
He expressed disappointment with the current quarter in which AMD saw unit sales of both CPUs and graphics hold flat or decline slightly. Seifert said he expects AMD's revenues to be flat or decline slightly through the next three months despite projections the PC market as a whole will probably grow 10-11 percent in 2011.
"We have a good product portfolio, but we have to work on our go-to-market strategy," he said. "There is no deviation from our near-term priorities, it’s a focus on execution-- that’s my top priority," he said.
"We feel good about the shape we are in today and the momentum we have generated—[the CEO shift] was a forward-looking statement from the board," he added.
Meyer earned about $1.9 million in total compensation in 2008, well below the chip industry's high fliers and slightly below the level of chief executives at Micron, National, Nvidia and STMicroelectronics.
A study by the advocacy groups United for a Fair Economy and the Institute for Policy Studies found that the average S&P 500 CEO was paid $10.5 million in 2008, 344 times the pay of typical American workers. A separate study said severance packages are typically three times annual salary levels.
In 2008, Qualcomm's Paul Jacobs and Intel's Paul Otellini led the pack of chip makers, earning $15.4 and $12.7 million in salary, bonuses and stock respectively. They were followed by Scott McGregor of Broadcom, T.J. Rodgers of Cypress and Rich Templeton of Texas Instruments who earned $10.8, $10.4 and $9.4 million respectively, most of it in stock options.
Avanti chairman and CEO Gerald Hsu got a $20 million severance package in 2001 amid a corporate scandal. That same year, Zilog's former chief executive, Curtis Crawford, got a $10.3 million severance package.
AMD had a few bright spots in an otherwise difficult quarter. It said it is seeing upside in 32nm capacity with its foundries is sampling thousands of 32nm processors and expects to be in full production of them by June. It also said it has sold a million of its Brazos chip platforms into a range of systems beyond their target notebook market including tablets, set-top boxes and point of sale terminals.