Intel-US Deal Sparks Criticism Over Board-Rubber-Stamping Provision

Intel's recent agreement with the U.S. government, which grants the government approximately 10% of the chipmaker's shares, includes a provision that critics contend effectively transforms the U.S. Department of Commerce into a rubber stamp for Intel's board of directors. As Intel's largest shareholder, the Commerce Department is now contractually bound, according to an August 25 securities filing, to vote its shares in favor of the board's nominees and recommendations. Furthermore, with limited exceptions, the department must also vote against any proposals not endorsed by the board. While the stated purpose of this arrangement is to ensure passive public investment, it concurrently strengthens executive power over other shareholders. Critics propose that a more equitable approach would have involved prorating the government's voting power. This agreement holds considerable significance, particularly given U.S. President Donald Trump's expressed interest in similar investment models, potentially establishing a precedent. The implications of this provision are underscored by a recent shareholder vote concerning executive compensation. At the May 6 annual meeting, the advisory "say on pay" vote garnered only 72% support, significantly lower than the S&P 500 average of 90%, following a recommendation against the package by proxy firm Institutional Shareholder Services. With the government's new 10% stake contractually obligated to support the board, controversial measures will now possess a guaranteed bloc of votes in their favor.