Pixelworks announces restructuring plan, 16% workforce reduction

In a regulatory filing, Pixelworks said, “On June 25, 2024, the Board of Directors of Pixelworks approved a restructuring plan to make the operation of the company more efficient and which would result in an approximately 16% reduction in workforce, in the areas of operations, research and development, sales, marketing and administration. The Board and management believe adoption of this restructuring plan will help streamline the company’s operations and workforce, and more appropriately align the company’s operating expenses with current revenue levels. The company expects the restructuring to be substantially complete by the end of the second quarter ending June 30, 2024 and expects to incur total estimated restructuring charges of approximately $1.7 million related to employee severance and benefits. The company expects that these charges will largely be recorded in the second quarter of 2024. In addition to the restructuring charges, the restructuring plan includes the payment by Pixelworks Semiconductor Technology of $1.2 million collectively to those terminated employees who are holders of an interest in one of the five employee stock ownership entities that were established to enable employee ownership of Pixelworks Shanghai. Per the terms of the ESOP agreements, PWSH must re-purchase from the ESOP such shares that are attributable to the withdrawing former employees for the amount invested plus annual interest of 5%, accrued to the date of withdrawal. Each former employee must withdraw from the ESOP, and the ESOP will remit to them the amounts paid by PWSH. The company expects this process to be completed within the third quarter of 2024. PWSH shall hold the Repurchased Shares as treasury stock, which can be re-issued to new employees in connection with the ESOP equity plan within the next three years, at which point any remaining shares must be cancelled. While held as treasury stock, the Repurchased Shares will not be eligible for voting. The total number of Repurchased Shares will equate to 0.50% of all PWSH shares. As a result of the restructuring, the company expects to realize annualized savings of approximately $4.0 million.”