Intel CEO Brian Krzanich Resigns After Violating Company Policy -- 5th Update
June 21 2018 - 12:08PM
Dow Jones News
By Austen Hufford and Aisha Al-Muslim
Intel Corp. Chief Executive Brian Krzanich resigned after the
company determined he violated company policy during a past,
consensual relationship with an Intel employee.
The company said that a continuing investigation by internal and
external counsel confirmed a violation of Intel's
non-fraternization policy, which applies to all managers.
Intel said it accepted Mr. Krzanich's resignation on Wednesday.
The company said it expects all employees to respect Intel's values
and adhere to its code of conduct. Mr. Krzanich couldn't be reached
for comment.
Intel has a longstanding, non-fraternization policy that
prohibits managers from having sexual or romantic relationships
with employees who report directly or indirectly to them, a
spokesman for the company said. The spokesman called the policy a
"strict" and "hard ban" that he said applies to all managers
regardless of seniority level. The policy also requires that
employees who see or believe someone acted inappropriately to raise
their concerns immediately, he said.
The board said Chief Financial Officer Robert Swan would become
interim CEO, effective immediately. Mr. Swan joined Intel in 2016
after being CFO of eBay Inc. Intel has started a search for a
permanent leader and is considering internal and external
candidates.
Intel's shares fell 2% to $52.50 in late-morning trading in New
York. Along with the CEO news, the chip maker provided a
better-then-expected financial outlook for the current quarter.
While details of the relationship weren't disclosed Thursday,
the public resignation highlights the discussions happening in
workplaces around the country over how employers should regulate
office romances.
Dating policies at U.S. companies vary. Some employers don't
allow senior managers to have relationships with co-workers, even
if they are not direct reports. The idea is that even if a manager
doesn't directly oversee an employee, they may have more power
within the organization. Other companies have no issue with
consensual relationships but have asked for them to be disclosed.
Still others have no dating policy at all.
Some companies have been revamping their rules around workplace
relationships in the wake of the #MeToo movement. Intel, like many
other technology companies, has said it was working to increase
gender and racial diversity in its workplace. In its 2017 diversity
report, the company said 73.5% of its total workforce was male.
Mr. Krzanich joins other CEOs who left following allegations of
relationships with employees, including Harry Stonecipher, who left
as CEO of Boeing Co. in 2005; Steven Heyer, who left Starwood
Hotels & Resorts Worldwide Inc. in 2007; and Christopher
Kubasik, who was the CEO-in-waiting when he left Lockheed Martin in
2012.
Mr. Krzanich started at Intel in 1982, rising through a series
of technical and leadership roles to become chief executive in
2013.
As CEO, Mr. Krzanich set about a broad effort to diversify the
company's offerings beyond its stronghold in chips for personal
computers and servers. He built out the data center group to
include not only server chips but also ancillary technologies. such
as memory and fast interconnections. He also worked to beef up
Intel's position in the Internet of Things, a phrase that describes
the trend toward outfitting a variety of household and industrial
equipment with computing and communications capabilities.
In recent months, Mr. Krzanich has emerged as a leading
proponent of the commercial drone industry, primarily by publicly
championing the company's technology and serving as chairman of a
high-level federal aviation advisory committee.
Since being named CEO, Intel's share price has risen 123%,
outpacing the S&P 500 but underperforming the PHLX
Semiconductor Sector Index. Sales have grown nearly 18% between
2012 and 2018 to $62.76 billion. Last year, Intel held a 99% share
of the most popular type of chips used in servers, and a 91% share
of the processors found in PCs, according to Mercury Research.
The company also released a financial forecast that was above
analyst expectations. For the current second quarter, the company
expected adjusted earnings of 99 cents a share and revenue of $16.9
billion. Analysts polled by FactSet had expected adjusted earnings
of 86 cents a share and revenue of $16.3 billion.
--Andy Pasztor contributed to this article.
Write to Austen Hufford at austen.hufford@wsj.com and Aisha
Al-Muslim at aisha.al-muslim@wsj.com
(END) Dow Jones Newswires
June 21, 2018 11:53 ET (15:53 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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