Intel CEO Pat Gelsinger, with U.S. President Joe Biden (not pictured), announces the tech firm’s plan to build a $20 billion plant in Ohio, from the South Court Auditorium on the White House campus in Washington, January 21, 2022.
Jonathan Ernst | Reuters
Intel executives will take staggered base-pay cuts just days after the chipmaker reported abysmal fourth-quarter earnings, the company said Wednesday. It’s also cutting benefits valued in the tens of millions for lower-level employees.
The pay cuts will impact executives ranging from CEO Pat Gelsinger to mid-level managers. Gelsinger will have his base salary cut by 25%, or by about $312,000.
The vast majority of Gelsinger’s compensation, however, is from stock awards and options. Gelsinger’s base pay was $1.25 million, according to his offer letter, or just under 0.7% of his nearly $179 million in total compensation for 2021, his first year in the top job. Intel’s share price has fallen over 50% since Feb. 2021, which was his first month as CEO.
The real costs may be felt among Intel’s rank-and-file employees, who like many Americans rely on bonus payments and retirement matching programs.
Intel will cut 401(k) matching in half from 5% to 2.5%, potentially saving Intel hundreds of millions of dollars. The company spent $489 million in 2022 to match employee contributions to qualified retirement plans, according to Intel’s annual report. Intel will also suspend merit raises and quarterly bonuses.
Intel’s pay cuts will also impact other leaders. Executive team members will take a 15% cut. Senior managers and midlevel managers will see pay cut by 10% and 5%, respectively. Lower-level employees would not be affected by pay cuts, the company told The Wall Street Journal.
“As we continue to navigate macro-economic headwinds and work to reduce costs across the company, we’ve made several adjustments to our 2023 employee compensation and rewards programs. These changes are designed to impact our executive population more significantly and will help support the investments and overall workforce needed to accelerate our transformation and achieve our long-term strategy,” the company said.
The company reported a net loss of $644 million for the fourth quarter of 2022 and offered a weak 2023 outlook including a 40% year-over-year decline in sales in the March quarter. Intel rival AMD, on the other hand, beat on both the top and the bottom lines but guided down 10% for the upcoming quarter.
Intel shares were down a little over 1% at the open.