(Bloomberg) — Intel Corp., struggling with a sharp decline in revenue and earnings, is cutting executive pay across the company to deal with a shaky economy and conserve cash for an ambitious turnaround plan.
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Chief Executive Officer Pat Gelsinger is taking a 25% cut in his base salary, the chipmaker said Tuesday. His executive leadership team will see their pay packages cut by 15%. Senior managers will take a 10% cut and mid-level managers will take a 5% cut. Shares were down 0.6% at $28.10 at around 9:40 a.m. in New York. The stock has lost nearly half its value in the past year.
“As we continue to navigate macroeconomic headwinds and work to reduce costs across the company, we have made several adjustments to our 2023 employee compensation and rewards programs,” Intel said in a statement. “These changes are designed to more significantly impact our executive population and help accelerate our transformation and the investments and overall workforce needed to achieve our long-term strategy.”
The move follows a gloomy outlook from Intel last week, when the company predicted one of the worst quarters in its more than 50-year history. Fierce competition and a sharp slowdown in personal-computer demand have wiped out profits and eaten away at Intel’s cash reserves. At the same time, Gelsinger wants to invest in the company’s future. He spent two years in a turnaround effort aimed at restoring Intel’s technological leadership in the $580 billion chip industry.
Meanwhile, Gelsinger will continue to use cash to reward shareholders. Intel said last week that it is committed to paying a competitive dividend. Analysts have speculated that the company may cut its payroll to deal with the recession.
Under Gelsinger’s plan, the company seeks to introduce new manufacturing technologies at an unprecedented pace. It will build new plants in Europe and the US and try to win orders from other chipmakers as an outsourced manufacturer. The move will put Intel in direct competition with Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co., two Asian companies that have passed it in the ranking of chipmakers based on size and power.
Intel isn’t the only big company cutting executive pay. Apple Inc., one of the few tech giants to skip a major playoff, is cutting CEO Tim Cook’s pay by more than 40% to $49 million through 2023. Some high-profile finance firms have taken similar steps, with Goldman Sachs Group Inc. CEO David Solomon seeing his 2022 compensation cut by nearly 30% to $25 million.
Intel is taking other steps to control costs. That includes reducing headcount and slowing spending on new plants — part of an effort to save $3 billion annually. That number will rise to $10 billion a year by the end of 2025, the agency said.
Intel, which notified workers of the latest cutbacks earlier Tuesday, is also reducing the match it offers for pension contributions. The Santa Clara, California-based company thanked employees for their patience and commitment.
Hourly workers and employees below the seventh level of the company’s system will not be affected.
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