Intel shocked employees Tuesday night by saying it was slashing employee compensation Last week’s dismal earnings report.
Starting March 1, the chipmaker said it will cut the base salary of mid-level and above employees by at least 5%, according to employees who heard the company’s announcement. Vice President he gets a 10% cut, more senior management he gets a 15% haircut and CEO Pat Gelsinger his base salary he gets a 25% cut.
Hourly employees are not deducted and their annual bonus remains intact. However, Intel is immediately reducing other incentives for all employees.
We have suspended pay raises for all employees, suspended our quarterly profit-sharing bonus and employee recognition programs, and cut our 401(k) retirement plan matching payments in half to 2.5%.
In a written statement, Intel spokesman Will Moss said, “These changes are designed to have a greater impact on our senior leadership team, accelerating our transformation and shaping our long-term strategy. “We know these changes won’t be easy, so we appreciate the commitment and perseverance of our employees at Intel.” .”
website First to report Intel salary cuts, following the job cuts Intel announced last fall. Intel has not disclosed how many people have lost jobs in Oregon, its largest base, but the company reports more than 500 job cuts in California.
The company sought to cut $3 billion in spending in 2022 as demand for microprocessors from PC makers and data center operators plummets.
Intel’s outlook continues to darken. The company reported Thursday that its sales fell 32% from his last quarter and expects earnings to fall 40% this quarter compared to the same period last year.
“We recognize that we have stumbled, lost (market) share and lost momentum,” Gelsinger told Wall Street analysts last week. But Intel has indicated that it thinks the worst is over. “I feel stable this year.”
investment analysts warn Intel’s “disastrous” financial results could lead the company to cut its quarterly dividend, which could lead to a significant drop in its stock price.
Cutting employee compensation could strengthen Intel’s finances without increasing layoffs, but it could also mean employees leave the company for new jobs. Equity-based compensation is a significant part of Intel’s total pay package, and employees were already battling a sharp drop in Intel’s stock price.
Intel’s stock closed at $28.26 on Tuesday. That’s just over half the value of last spring.
Tuesday’s news is sure to demoralize, too.
Employees said Gelsinger delivered the message in a company-wide solemn address Tuesday night. They said he tried to rally employees by referring to the difficult times Intel endured in the 1980s before Intel emerged as the world’s dominant chipmaker. He suggested that the cuts could be reversed if Intel’s fortunes improved.
Intel has lost its pole position in the industry over the past few years after a series of manufacturing stumbles, and it’s not clear if Gelsinger can engineer another comeback. has pledged to spend billions on new fabs, saying it has stepped up the pace of introducing a new generation of chip technology.
But rival Taiwan Semiconductor Manufacturing continues to make strides of its own, with many other chip companies, including AMD and NVIDIA, contracting TSMC to make chips. This has allowed it to take market share away from Intel despite the overall market cooling.
Intel has not disclosed how many workers will be subject to pay cuts, but Intel’s compensation structure is heavily skewed toward the upper tier. The cuts will have a major impact on Oregon, home to Intel’s cutting-edge research and his more than 20,000 employees.
At a rough estimate, state economists Josh Lehner Estimation Intel’s pay cut could cut Oregon’s total wages by $150 million to $200 million. That’s about 0.15% of all wages statewide.
— Mike Rogoway | [email protected] | | 503-294-7699
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