Ruiz leaving AMD spinoff after insider-trading report

Nov 02, 2009 (San Jose Mercury News - McClatchy-Tribune Information Services via COMTEX) -- AMD | Quote | Chart | News | PowerRating -- Hector Ruiz, identified last week as one of the sources of inside information in the Galleon hedge fund scandal, resigned Monday from Globalfoundries, a company he helped create when he ran Advanced Micro Devices.

A terse announcement posted on Globalfoundries' Web site said Ruiz is taking a voluntary leave of absence and will formally depart the company on Jan. 4.

The announcement said he submitted his resignation in September, effective in January. A source familiar with the matter said he decided to leave in January because the company was doing well and to make room for new leadership to take over. The announcement of his January departure was accelerated after the events of last week, the source said.

Ruiz, 63, was identified by the Wall Street Journal as the "AMD executive" who, according to a federal complaint, gave New Castle hedge fund operative Danielle Chiesi a running account last year of AMD's negotiations to create Globalfoundries.

The deal to create Globalfoundries was announced by AMD and the Advanced Technology Investment Company in October 2008. Shortly before that, the "AMD executive" was recorded telling Chiesi that the impending deal "would shock the hell out of everybody."

Ruiz, who became AMD's CEO in 2000, left that post in July 2008, but retained the position of chairman and executive chairman of AMD until March. He became chairman of Globalfoundries when it began operations this year.

A criminal complaint filed by the U.S. Attorney in the Southern District of New York, alleges that Chiesi and Galleon hedge fund co-founder Raj Rajaratnam bought thousands of shares of AMD and other stocks armed with information from an AMD executive, an IBM executive and a McKinsey consultant.

Chiesi, Rajaratnam and four others have been charged with securities fraud and conspiracy for buying and selling stocks based on inside information from several sources. Among the stocks were Silicon Valley tech icons Intel, Google and AMD.

Ruiz was not named in the federal complaint and he has not been charged. The complaint does not indicate the AMD executive was aware that Chiesi and Rajaratnam were trading in AMD stock.

He was not available for comment Monday.

Ruiz is resigning from a post that paid lavishly and didn't seem to have many duties, according to analysts. He was a non-voting, non-director board chairman of Globalfoundries.

He had a two-year employment contract that paid an annual base salary of $1.15 million and a performance bonus of 200 to 400 percent of his base salary. His employment agreement contains provisions for paying him a lump sum of salary and bonuses remaining in his two-year term, should he leave before that term ends. But that is only if he is let go for cause or resigns for "reasonable cause," as defined by the agreement. The language of the agreement does not appear to apply to what little is known about his departure.

"Ruiz's resignation is likely to have little to no impact on AMD the product company, and I would expect it to have minimal impact on GlobalFoundries given the nature of Ruiz's position,"said Stacy Rasgon, analyst with Sanford Bernstein said.

Rasgon called Ruiz' resignation in September puzzling "A September resignation, unrelated to Galleon, wouldn't seem to make much sense. I'm not sure what the duties of a non-voting, non-director chairman are, but given the compensation he was receiving he would probably have liked to stay for his full term if at all possible."

While he has been criticized for AMD's performance while he was at the company's helm, Ruiz salvaged AMD by putting together the deal that created Globalfoundries, Rasgon said. That took a crushing short-term debt off AMD's books and saved it from billions in capital expenditures needed to support a semiconductor fabrication plant of its own, he said.

Ruiz was also awarded a $3 million bonus on completion of the deal that created Globalfoundaries.

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