(Bloomberg) — Intel Corp., grappling with rapidly falling revenue and profits, is cutting executive pay across the company to cope with the faltering economy and preserve cash for a ambitious turnaround plan.
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CEO Pat Gelsinger is taking a 25% cut from his base salary, the chipmaker said on Tuesday. His executive leadership team will see their salary package reduced by 15%. Senior managers will be reduced by 10% and compensation for middle managers will be cut by 5%.
“As we continue to navigate macroeconomic headwinds and work to reduce costs across the company, we have made several adjustments to our programs,” Intel said in a statement. reward and compensate its employees in 2023”. “These changes are designed to have a more significant impact on our executive team and will help support the investments and overall workforce needed to accelerate the transition and achieve our long-term strategy.”
The move follows a dismal outlook from Intel last week, when the company predicted one of the worst quarters in its more than 50-year history. Fierce competition and plummeting demand for personal computers have wiped out profits and eaten into Intel’s cash reserves. At the same time, Gelsinger wants to invest in the company’s future. He’s spent two years on a transformational effort to restore 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 remains committed to providing competitive dividends. Analysts have speculated that the company may reduce its payout ratio in response to the slowdown.
Under Gelsinger’s plan, the company is looking to introduce new production technology at an unprecedented rate. It will also build new factories in Europe and the US, and try to win orders from other chipmakers as an outsourced manufacturer. That move would put Intel in direct competition with Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co., two Asian companies that have overtaken Intel in the ranking of chipmakers by size and capacity.
Intel isn’t the only major company cutting executive pay. Apple Inc., one of the few tech giants to give up on major layoffs, is cutting CEO Tim Cook’s salary by more than 40% to $49 million for 2023. Famous has made similar moves, with Goldman Sachs Group Inc. .CEO David Solomon sees his 2022 pay cut by about 30% to $25 million.
Intel is taking other steps to rein in costs. That includes reduced headcount and slower spending on new plants – part of an effort to save $3 billion annually. That number will grow to $10 billion a year by the end of 2025, the company said.
Intel, which notified employees of the latest cuts early Tuesday, is also reducing the matching it offers for pension contributions. The Santa Clara, California-based company thanks employees for their patience and commitment.
Hourly workers and employees below the seventh level in the company’s system will not be affected.
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