Intel Corp.
Summary:
Overall we see a solid executive compensation program with very few negative aspects. Not many areas for improvement from our standpoint.
Analysis:
The semiconductor industry is all about efficiencies and achieving economies of scale. These companies have done an excellent job focusing on these areas. Increased efficiencies in wafer production combined with increased diversification internationally have resulted in a lot of success.
Intel is one of the leading manufacturers in this industry who have had success in these areas. In addition, they have seen strong demand for some of their products, such as the Pentium series of microprocessors. Not only are these companies successful on their own, but they are also succeeding together. Intel, Samsung, and TSMC recently reached an agreement to change the size of their wafers. This agreement will result in increased cost savings for all of the companies involved.
There is additional good news related to new products. Intel invests heavily in R&D and should see strong growth in the future due to a lot of new products coming on the horizon. It's anybody's guess why the stock price has been so volatile for the past 5 years. In spite of this volatility, however, the stock price has remained within a manageable range, between $18 and $35 per share.
So… What Are They Paid?
The good news doesn't stop there either. The executive compensation program is just as solid. The money given out for salaries and stock awards was very low compared to most programs. Stock awards were as low as $600,000 for the CEO and averaged $340,000 for the NEOs! Option awards were slightly high, but not too bad. Intel gave out $6 million to the CEO and an average of $2.5 million for the NEOs. A pretty fair number when you take into account how low the stock awards were.
The bonuses were categorized as non-equity incentives. These too were average at best, with the CEO receiving $4 million while the NEOs took home an average of $1 million. The CEO's bonus was also above the company's target amount. Not bad. Another positive for the bonus program is that the bonus can go all the way to 0 if the execs' performance is sub-par. Many programs only fall to about 75% of the target amount.
Maybe the best part of the program, no severance pay and no perks! Intel believes in an "egalitarian culture" and thus does not provide perquisites to executives. You don't hear that very often!
A unique feature of the compensation numbers is the presence of an unusual NEO, the Chairman of the Board. Mr. Barrett takes home a comparable amount to the CEO and the other NEOs. This may be a lot to pay the Chairman of the Board, but it could also signal the power of the Board to control the compensation given to the CEO and other NEOs.
Compensation Details:
| CEO | NEO Avg. | |
|---|---|---|
| Base Salary | $770,000 | $373,100 |
| Bonus | N/A | N/A |
| Stock | $595,100 | $342,380 |
| Options | $6,034,700 | $2,493,900 |
| non-Equity Incentives | $3,964,200 | $1,353,920 |
Reference Links:
(1) Annual
Proxy Statement
(2) Annual
Report