February 7, 2014
Intel Requires Stock Ownership From More Managers
– Broc Romanek, CompensationStandards.com
Here’s a WSJ article entitled “Intel Unveils New Compensation Structure“:
Intel Corp. unveiled a series of changes to its executive compensation structure Monday, including boosting the number of management employees required to own stock. The chip giant, whose new chief executive has been trying to more closely align the financial interests of employees and shareholders, said 350 senior leaders will be required to own Intel shares beginning in 2014. Only 50 managers were previously required to hold company stock.
Intel said there will no longer be a “floor” to protect the value of performance-based equity awards for its senior executives, which can now fall to zero. It added that 50% of the company’s annual cash bonus payout for all employees will be based on performance, up from 33% in 2013. The company’s profit-sharing plan now will pay out quarterly as opposed to semiannually, allowing for incentive-based compensation to be paid out more frequently.
Intel made the disclosures in a letter to shareholders that was part of a filing with the Securities and Exchange Commission. It attributed the moves to new compensation policies of Brian Krzanich, who became Intel’s chief executive last May 2013 after predecessor Paul Otellini announced plans to step down in November 2012.
The surprise shift, Intel has said, caused the company to issue retention grants to Mr. Krzanich and other senior staff members to remain at Intel during the transition. The grants, in the form of restricted stock units, were valued by the company last year at about $10 million each. Mr. Krzanich’s total compensation for 2012 was about $15.7 million, but declined to about $9,139,597 in 2013, according to the Intel filing. His 2013 compensation included a base salary of $887,500 and a $1.75 million bonus, with the rest composed of equity compensation.
Intel, which said Monday it doesn’t see the need for other retention grants for the foreseeable future, reiterated that Mr. Krzanich’s is roughly the 25th percentile relative to CEOs at peer companies.
Intel, known for supplying chips that serve as calculating engines in personal computers, has suffered as customer dollars have shifted from those devices to tablets and smartphones. The company said last month that sales of chips for the ailing personal-computer market improved in the fourth quarter, but demand for larger systems was weaker than expected. Intel forecast flat revenue for 2014, while analysts had been expecting slight growth.