Intel CEO sold millions in stock after company was informed of vulnerability, before disclosure
Intel Corp. Chief Executive Brian Krzanich sold millions of dollars worth of shares after the company was informed of vulnerabilities in its semiconductors but before it was publicly disclosed.
In a filing with the Securities and Exchange Commission in late November, Intel INTC, -3.39% disclosed that Krzanich had sold hundreds of thousands of shares that he previously owned and that he had acquired as stock options. It is important to note that the sale was part of a 10b5-1 plan, which executives use to plot out stock sales ahead of time in an effort to avoid accusations of acting on insider information — executives at Equifax Inc. EFX, +0.52% who sold shares before its disclosure of a massive breach did not have such plans in place.
However, the filing also notes that Krzanich adopted the plan just a month before the sales, on Oct. 30, 2017. According to researchers, Intel and other chip makers were informed June 1, 2017, about dual vulnerabilities named Meltdown and Spectre, one inherent in Intel chips and another baked into all CPUs.
An Intel spokeswoman reached by phone Wednesday evening would only say that the sale of the shares was “unrelated” to Meltdown and Spectre.
Intel stock had its worst day in months Wednesday, after The Register first reported a widespread vulnerability within Intel chips on Tuesday evening. Intel discussed the vulnerabilities Wednesday, calling parts of the original report inaccurate but still acknowledging that there are design flaws that could make systems susceptible to attack.
Meltdown is a vulnerability that could be used against Intel chips, and software makers are pushing out patches and updates meant to address the vulnerability. Spectre is a problem for all computer processing units, according to the researchers who discovered it, and it may not be possible to fix.
Krzanich acquired about 644,000 shares that vested at prices that varied from $ 12.99 to $ 24.17, and sold them for a weighted average price of $ 44.05. He also sold almost 245,000 shares he already owned at a weighted average price of $ 44.56, bringing his total down to exactly the 250,000-share threshold that as Intel CEO he must own as of May, as Motley Fool previously reported.
In total, the stock sales brought in more than $ 39 million, according to the SEC filing, though that total does not include the amount Krzanich paid for his stock options.
Intel closed Wednesday with a 3.4% decline at $ 45.26, and dropped lower than $ 45 in late trading. Shares are still up nearly 25% in the past year, as the Dow Jones Industrial Average DJIA, +0.40% has gained 26% and the PHLX Semiconductor index has gained 44.5% in that time.