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Is it time to rethink CEO pay for companies receiving billions in state aid and subsidies?

April 1, 2022, 9:39 AM UTC

Good morning.

I’m a fan of Intel CEO Pat Gelsinger. He’s a smart man, a proven leader, and a person of integrity. If his bold plan to remake Intel succeeds, it will not only be good for the company, but good for the world. Oil-rich Russia’s invasion of Ukraine has thrown in high relief how vulnerable the West is to the possibility of China invading semiconductor-rich Taiwan. Intel’s plan to make more chips in the U.S. and Europe would significantly reduce that vulnerability. (You can listen to Ellen McGirt’s and my interview with Gelsinger on Leadership Next here. “Chips are the new oil,” he told us.)

Still, I was taken aback yesterday to see the Wall Street Journal report that Gelsinger was given a $180 million pay package in 2021, making him the second highest-paid CEO among S&P 500 companies. Sure, Gelsinger only gets the full payday if his plan succeeds. A $45 million slug of it requires Intel’s stock to triple in five years. If that happens, shareholders will happily underwrite his paycheck.

But here’s the catch: Intel’s turnaround plan depends on significant taxpayer subsidies from the U.S. and Europe to support his reshoring of chip manufacturing. That’s fine by me—the West has a clear geopolitical interest in diversifying chip sourcing away from Taiwan. But if governments are going to underwrite the risks of Gelsinger’s plan, shouldn’t they also participate equally in the rewards? Perhaps Chrysler-style warrants (remember those?—yet another flashback to the ‘80s) are in order.

We live in an era when companies are rethinking their role in society and taking new responsibility for problems that lie beyond their bottom line. But CEO compensation is an issue too often left out of the discussion. People will only trust companies to take on society’s biggest problems if they feel society is getting a fair shake in return.  

I welcome readers thoughts on this. And I’d urge you to listen to this week’s Leadership Next interview, with Clorox CEO Linda Rendle, whose company’s stock has been on a roller coaster since she became chief—riding the pandemic wave up and now inflation and supply-chain woes down. 

More news below.

Alan Murray
@alansmurray

alan.murray@fortune.com

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This edition of CEO Daily was edited by Bernhard Warner.

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