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After another bloodbath of an earnings report, chipmaker Intel COropration has decided to reduce salaries and cut down bonuses for its employees, the firm confirmed to Reuters late night yesterday. Intel's earnings saw the company miss Wall Street estimates and post a 28% annual drop for the quarter and a 16% drop for the full year. At its earnings call, the firm's chief executive officer (CEO), Mr. Patrick Gelsinger, admitted that Intel had slipped but reiterated that the company is taking the right steps to ensure that it will become a market leader once again.
Now, with revenues dropping and capital expenditure picking up, Intel has announced large pay cuts for several employee grades, with the highest cut of 25% being taken by Mr. Gelsinger himself.
Intel Eliminates Quarterly Bonuses, Pauses Annual Bonuses, Suspends Raises and Halves Pension Contributions
The report, initially broken by SemiAnalysis, reveals that the pay cuts are throughout most of Intel's employee grades. Intel has 14 job levels, with fresh college graduates starting in grade 3 to 4m graduate entry level workers starting in grades 5 to 6 and Ph.D. entry level workers starting at grade 7. The grade levels end at 13, and directors and senior vice presidents are ranked below this level.
According to the details from SemiAnalysis and corroborated by Reuters, employees in grades 7 to 11 will take a 5% basic pay cut, vice presidents will take a 10% pay cut, more senior executives will see their basic pay reduced by 15% and Intel's chief Patrick Gelsinger's compensation will be reduced by a quarter, or 25%. An Intel filing with the Securities and Exchange Commission last year revealed that Mr. Gelsinger's base salary was $1.1 million in 2021, alongside a hiring bonus of $1.75 million.
At the same time, the executive also received a whopping $140 million in stock awards and another $29 million in options - with large portions of these also locked and only set to be awarded in case of upward share price performance.
Additionally, Intel has also paused annual bonuses for employees, removed quarterly bonuses and suspended merit pay raises. Additionally, the firm has halved its defined contribution payments to retirement plans from 5% to 2.5%.
An Intel spokesperson, in a statement made to Reuters, explained that:
changes are designed to impact our executive population more significantly and will help support the investments and overall workforce.
The ongoing economic crunch has also made Intel pause or eliminate non core strategic growth initiatives. These include slowing down equipment purchases, shutting down some facilities, and delaying the construction of new chipmaking facilities. At the same time, the firm is also building new facilities through which it aims to reenter the contract chip manufacturing industry and catch up to its Taiwanese rival, the Taiwan Semiconductor Manufacturing Company (TSMC).
TSMC, which is the world's largest contract chip manufacturer, has rapidly caught up with Intel. Mr. Gelsinger admitted during his company's latest earnings call that Intel has fallen behind the Taiwanese firm, but promised that the American firm, credited by many to have invented the modern day transistor, will catch up next year.
Additionally, Intel also brought forward its manufacturing timeline for advanced technologies late last year, in a strong statement of intent from a firm that has failed to introduce new process nodes for years.
