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Intel slashes employee, exec pay amid PC market downturn

Stock Markets Feb 01, 2023 11:47AM ET
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© Reuters. FILE PHOTO: An Intel Corporation logo is seen on a sticker on a laptop for sale in Queens, New York, U.S., November 16, 2021. REUTERS/Andrew Kelly/File Photo
 
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By Stephen Nellis

(Reuters) - Intel Corp (NASDAQ:INTC) said on Tuesday that it had made broad cuts to employee and executive pay, a week after the company issued a lower-than-expected sales forecast driven by a loss of market share to rivals and a PC market downturn.

The reductions will range from 5% of base pay for mid-level employees to as much as 25% for Chief Executive Pat Gelsinger, while the company's hourly workforce's pay will not be cut, said a person familiar with the matter who was not authorized to speak publicly.

Intel spokesperson Addy Burr said in a statement that the "changes are designed to impact our executive population more significantly and will help support the investments and overall workforce."

Intel last week said its profit margins were plunging as the PC market cools after several years of growth during the pandemic.

Gelsinger also conceded that Intel has "stumbled" and lost market share to rivals such as Advanced Micro Devices (NASDAQ:AMD) Inc, which on Tuesday reported quarterly sales that were above Wall Street's expectations.

The person familiar with Intel's pay cuts said that in addition to 5% decreases for mid-level employees, vice president level employees will see 10% reductions and the company's top executives other than the CEO will get 15% cuts.

The company has also lowered its 401(k) matching program from 5% to 2.5% and suspended merit raises and quarterly performance bonuses, the person said.

Annual performance bonuses based Intel's overall financial performance will remain but those bonuses have been smaller in recent years as the company has lost ground to rivals, the person added.

Intel slashes employee, exec pay amid PC market downturn
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Comments (5)
Howard chiang
Howard chiang Feb 01, 2023 4:11PM ET
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I left Intel in 2020 and back then all those bonuses were very good to at least keep employees. I feel bad for Intel as a company and with the bonus and salary cut on top of stock taking a beating, the company will lose even more talents. A few of my colleagues already left Intel over past 2 years. It seems this trend will become a vicious cycle for Intel. Without good engineering talents, it's harder to turn around. Honestly I don't think Gelsinger is doing a good job as Intel CEO. He seems to be all talks. Intel's problem is really it's culture and operations based on decade old mentality and has not caught up with new ways of doing business. There was an old sayings in Intel: "It's Intel way or the highway". Hopefully Intel will change that eventually, even though they have been trying for quite some years now. I guess something will never change.
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Ronald Warren
Ronald Warren Feb 01, 2023 5:40AM ET
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When Intel bottoms, it should be a buying opportunity. Investing 100 billion in an Ohio chip plant and 20 billion in Arizona on chip production. Soaring with the eagles in a few years.
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LL MM
LL MM Feb 01, 2023 5:40AM ET
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W/o war their fabs will only suffer from being under low utilization. Why would a stock holder company (margin and revenue oriented) want chips produced in the usa (IFS) when TW chips are much cheaper (labor+power costs) and yields are much much much much higher for top nodes. American chips will never be price competitive. Hell just look at TSMCs current one and only fab in the usa (its barely profitable). Apart from that most 2nd row production lines are in asia too. And we could just spectate what happens when fabs are only under low load, margins drop like stones and even operating margin losses are possible. So dont get too excited really. Fabs can be a burden too. They are no redeemer.
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LL MM
LL MM Feb 01, 2023 3:31AM ET
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Just cut the dividend finally and get over with it. Seriously.
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Roy Nisani
Roy Nisani Feb 01, 2023 3:31AM ET
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they will not, and u will keep bagholding amd for nothing
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Benjamin USA
Benjamin USA Jan 31, 2023 11:13PM ET
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Suspended merit raises and bonuses is the dumb part of this.
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Options Trader
Options Trader Jan 31, 2023 10:36PM ET
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25% is not enough
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