Why Did Henri Go? . . .

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First, Henri Richard was the head of PR and marketing. That’s the person who puts the lipstick on whatever the company comes out with. Blame him for trying to make pigs look pretty, but he wasn’t the guy who bred the pigs.

He didn’t determine the R&D budget or make design decisions. He didn’t decide to buy ATI, or decide to empty the piggybank and go deep into debt to do so.

No doubt he had a little say in these decisions, but other people made these calls.

Second, never underestimate the personal in a decision like this. Mr. Richard is known to live the high life, and a perusal of his financial relationship with AMD shows he likes his money up front.

I won’t make your eyes glaze over with financial data, but if you go here, you’ll see that Mr. Richard is pretty “asset-lite” on retained AMD shares compared to roughly-equivalent AMD execs like the other AMD bigwigs like Derrick Meyer and Thomas McCoy.

This is because Mr. Richard normally sold a bit over 80% of his stock options when he got them, like clockwork, good, bad or indifferent stock price, as you can see here. Indeed, that clockwork-like was interrupted in 2007, and while part of the reason is no doubt AMD’s poor performance, some of it may have also been due to pressure not to sell while the stock was doing poorly.

Another strong hint that money was the root of this resignation is a rather amazing comment on page 20 of the above-mentioned document regarding a more advantageous form of executive bonus:

“For Mr. Meyer and Mr. Richard, the equity grant is more heavily weighted toward RSUs due to Mr. Meyer’s promotion and role-specific retention issues for Mr. Richard.”

In English, “role-specific retention issues” means “pay me my way or I hit the highway.” It’s not amazing he made the demand; it’s amazing that AMD would actually reveal this kind of problem in a public document.

The document also shows that Mr. Richard made about $3.5 million in 2006, the vast majority of which were bonuses and stock price-based incentives. As we hinted before, due to AMD’s terrible financial performance, he was on course to make much less than that in 2007.

Third, this resignation is nothing sudden. If it were, he wouldn’t have a new job lined up. Nobody hires multi-million dollar execs off the street at a moment’s notice; it normally takes at least a few months just to work out the details.

Henri’s cash flow became highly constricted at the beginning of 2007, just around the time when he was being asked to put lipstick on some decidedly delayed piggish-looking vapor, chewing up more than a bit of his credibility in the process.

Given everything else we know, it’s at least a reasonable guess that Mr. Richard looked down the road, saw plenty more of the same, and said, “If you want me to put lipstick on these porcines and keep sticking my neck out, you’re at least going to pay me for it,” and when AMD wouldn’t, he started looking for someone who would. And he did.

If I had to guess, based on a few tea leaves, I’d guess he started looking around March, found something in May, and wrapped up the details recently.

This is not to say that some version of “rats leaving the sinking ship” may not also be true, and there’s a few signs that there’s growing discord among the officers of the Green Ship (which we’ll talk about tomorrow).

However, in this particular case, mundane money appears to be a major if not the major reason for the move.

Ed


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