Intel CEO Resigns Post Over Affair

SAN FRANCISCO — For decades, Intel was one of the most predictable players in the technology industry. On Thursday, the semiconductor-maker blindsided Silicon Valley with the abrupt resignation of its chief executive over a relationship with a subordinate.

The chip company said it was recently informed that Brian Krzanich had a “past consensual relationship” with an Intel employee. An investigation by internal and external counsel then found that Krzanich, 58, had violated a non-fraternization policy that applies to managers, the company said. So Intel’s board accepted his resignation.

The disclosure about Krzanich, a soft-spoken chip manufacturing specialist who joined Intel in 1982 and has run it for five years, left many questions unanswered. The company declined to identify the employee involved, when the relationship took place or any additional details. It characterized its internal investigation as “ongoing.”

Krzanich’s relationship with the subordinate was not recent, said one person briefed on the situation, who declined to be identified because the company discussions over the matter were confidential. Intel found out about the relationship only a few days ago, this person added.

Robert Swan, Intel’s chief financial officer, was appointed interim chief executive while the company conducts a search for a permanent new leader. Krzanich could not be reached for comment.

“We appreciate Brian’s many contributions to Intel,” Andy Bryant, Intel’s chairman, said in a prepared statement. He added that he knew the company would continue to perform.

Krzanich’s resignation is the latest turmoil in executive suites since the #MeToo movement emerged in the wake of allegations against producer Harvey Weinstein. The heightened scrutiny of workplace behavior has led executives at Nike, Lululemon Athletica, Social Finance and many other companies to leave their jobs.

Over the years, other chief executives have also been felled after violating workplace behavior standards, either because of affairs or through other incidents, including at Boeing, Hewlett-Packard and Priceline.

Intel, which recently yielded the title of the world’s largest chipmaker to Samsung, is approaching its 50th birthday. The company, known for microprocessor chips that carry out calculations in most personal computers and server systems, has prided itself as a standard-setter in corporate governance.

An Intel spokesman said the company’s most recent version of its strict non-fraternization policy, which prohibits managers from sexual or romantic relationships with employees who report directly or indirectly to them, has been in place since 2011.

Even so, Intel, like many companies, has not been impervious to romance. Krzanich, who rose through the ranks at Intel, married a woman who once worked in the company’s manufacturing operations. They have two daughters. The wife of Krzanich’s predecessor, Paul Otellini, who died last year, also once worked at Intel.

As chief executive, Krzanich has been changing Intel’s corporate culture. The company has undergone an exodus of longtime managers — such as Renee James, who was Krzanich’s No. 2 but later faded in prominence and left the company — and the arrival of senior executives from other companies such as Qualcomm.

Krzanich argued that Intel needed an infusion of fresh thinking to achieve his goal of reducing the company’s dependence on the sluggish PC market. He also publicly committed the company to increasing the number of employees from groups underrepresented in some technical specialties, including minorities and women.

“Intel is a different place, and we’ve done this while growing the business,” Krzanich said at the company’s annual shareholder meeting in May.

But five former Intel employees, who declined to be identified for fear of retaliation, said Krzanich at times exhibited an arrogant personal style and handled staff changes in ways that created enemies. Some of these people said the #MeToo movement most likely influenced how Intel’s board handled the matter.

Krzanich also raised eyebrows by selling about $39 million in Intel shares in November, after the company learned of potential security flaws in its chips and before the issue was disclosed this year. The company said the sale was unrelated to the flaws, adding that Krzanich continued to hold shares in line with Intel guidelines.

Krzanich sought to broaden Intel’s business, taking the company into fields such as drones and wearable devices. He also presided over major acquisitions such as Intel’s $15.3 billion acquisition of Mobileye, an Israeli company that makes chips and software used in driver-assistance systems and self-driving cars.

Yet Intel has lately struggled to sustain Moore’s Law, the pace of chip miniaturization named for the company’s co-founder, Gordon Moore, which expands the capabilities of its chips. It has announced repeated delays in perfecting its latest production process.

During Krzanich’s tenure, Intel’s market capitalization rose to above $240 billion, with a share price that is up 50 percent since the beginning of 2017. On Thursday, while the company’s shares declined 2 percent on the announcement of the leadership change, Intel said it expected to report second-quarter results that exceed Wall Street estimates.

Pierre Ferragu, an analyst with New Street Research, said the projection points to a “monster” quarter for the company. “The resignation itself is in our view a completely idiosyncratic event, with no impact to the company,” he wrote in a research note.

Swan is a relative newcomer to Intel, joining the company as chief financial officer from the private equity firm General Atlantic in 2016. His past experience includes a stint at General Atlantic and nine years as chief financial officer at eBay.

Krzanich’s total compensation last year was $21.5 million, according to the executive compensation firm Equilar. That put him at 60th place in an annual ranking of highest-paid chief executives in the United States that Equilar conducted for The New York Times.