Intel’s Record Profits and a Look Inside Their Boardroom

February 5, 2010 at 3:44 pm

In mid-January it was announced that Intel Corp. reported one of the most profitable quarters in their history. Revenue was up 28 percent year over year and net income up 875 percent over the same period last year. Yes, microprocessor prices are up and the company has launched a multitude of new chips. Additionally Paul Otellini has faced his organization’s and the economy’s challenges with good judgment and fortitude. But what about Intel’s Board of Directors? Can we learn anything by looking at this group that has helped guide Intel through the turmoil of the past year?

Intel’s board is made up of eleven directors. There is, as suggested by best-practices, a separate Chair and CEO and the majority of directors are independent. Upon casual examination, one also immediately notices that three of these directors are women representing 27% of the total. This is in stark contrast to the reported 9.6% of seats held by women in the 400 largest companies studied by The Graduate School of Management at the University of California Davis. Even the 14.1 percent of seats held by women in 50 of the largest companies studied by the Chicago Women’s Network is significantly less than the distribution at Intel.

Intriguing as well is the fact that Intel’s directors have quite varying degrees of tenure on this board. The most seasoned director has been on the board approximately 17 years. At the other end of the spectrum are the two directors who were appointed in 2009. In between runs the gamut of time spent on this board. This manner of board evolution has numerous positive and desirable results. There is obviously less insular thinking and less entrenchment of factions within the board. Additionally, there is a regular introduction of new ideas and styles of operating that converges in this group.

The board at Intel also has ample CEO talent in that there are two former CEO’s on the board and one who currently holds this role. There is ample financial expertise and even government proficiency as well as several esteemed academics.

Surprisingly, for a company with 61% of revenues in the Asia/Pacific region Intel appears to have only one director with expertise in this region of the world. Absent from this board as well is an executive with strong manufacturing expertise. Given the complex nature of the products they produce as well as their many manufacturing facilities throughout the world Intel would certainly be well-served by having a director who has expertise in operations, manufacturing, supply chain and the like.

So like the majority of corporate boards, Intel does have some room to implement modifications and improvements. On the other hand the board is a model of good governance in many ways and should be seen as such. Imagine though what some minor enhancements might do this the success of this company!


Entry filed under: Business, Corporate Governance.

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