Intel Institutes Pay Cuts For Executives And Managers In Response To Steep Drop In Revenue

Key takeaways

• Intel’s fourth-quarter revenue was down 32% year over year
• In response to the lower revenue, the company is cutting pay for executives and managers
• After the report was released, Intel stock prices fell

Intel announced poor financial results for Q4 of 2022. The company saw its revenue fall by over 30% compared to Q4 of 2021, and full-year revenue was down 20% year over year. Not surprisingly, the company is looking to make significant changes to right the ship.

The first wave of changes is coming in the form of pay cuts for executives and managers. We will explore how this news is impacting Intel and its investors.

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Compensation changes

The poor financial results of last year have pushed the tech company to make significant compensation changes. Intel announced it would implement pay cuts directly impacting executives and managers. For now, the average employee is not impacted.

“As we continue to navigate macroeconomic headwinds and work to reduce costs across the company, we’ve made several adjustments to our 2023 employee compensation and rewards programs,” Intel said in a statement. “These changes are designed to impact our executive population more significantly and will help support the investments and overall workforce needed to accelerate our transformation and achieve our long-term strategy.”

The cuts breakdown is as follows:

• The CEO, Pat Gelsinger, is taking a 25% pay cut from his base salary
• Executive leadership will see their pay slashed by 15%
• Senior managers will see a 10% pay reduction
• Mid-level managers will see a 5% pay reduction

These cuts are intended to impact the company’s top earners more than the average employee. The focus on high earners has a double impact. Not only will cutting the salary of executives and managers net more capital, but it also leaves most of Intel’s workforce with an untouched paycheck.

Unfortunately, all employees will see cuts to their benefits. The company is cutting its 401(k) matching contributions by 50%. Additionally, quarterly bonuses and merit raises are off the table for the foreseeable future.

Previous staffing changes

The current pay cuts are coming after layoffs were first announced in 2022. Currently, around 200 Intel employees are expected to be without a job by the end of the month.

Typically, layoffs indicate tough times for a company. In the case of Intel, shrinking revenue seems to be the driving factor behind the layoffs. A smaller payroll can help the company chart a successful course moving forward.

Intel’s focus moving forward

Intel has seen significant declines in its sales. While some of this is due to dropping demand across the industry and the impacts of inflation, part of the problem is Intel’s shrinking market share.

At one point, Intel completely dominated the market. However, new competition has been eating into the company’s market share. For example, AMD has significantly grown its market share in recent years.

What will happen to Intel stock?

It’s impossible to predict future stock prices. A major drop in revenue is a clear red flag for the company. Nevertheless, Intel will likely get back on track.

The slashing of compensation for the company’s leadership team indicates they are willing to do whatever it takes to succeed. After the first announcement of dropping revenue, the stock prices fell from $30.09 per share to $28.16. However, the company’s stock has already fallen by roughly 50% in the last year, so this drop was relatively insignificant.

If the company’s leadership can effectively execute its recovery plan, stock prices might rebound. That said, only time will tell how Intel’s story plays out.

How to invest in tech

It’s no secret that tech companies have seen dark times in the last year. Hundreds of companies in the tech sector have laid employees. While layoffs are uncomfortable for everyone to witness, the tech industry as a whole will likely rebound. However, individual companies might not weather the storm.

As an investor, it’s challenging to pick individual companies that will succeed. It’s especially difficult when the news cycle can change everything in a matter of hours. Investing in tech through an AI-powered tool might be the solution if you don’t have the time or energy to constantly monitor market news.

Using Q.ai, you can build a portfolio through Investment Kits. You can invest in themes you care about, like Clean Tech. As the market changes, Q.ai will make any necessary changes to keep your portfolio in line with your financial goals and risk tolerance.

Ultimately, this means you won’t have to stay glued to the headlines. Instead, you can sit back, knowing that Q.ai is on top of things for you.

The bottom line

Intel’s news about pay cuts for executives and managers is a big deal. As the company continues to make a splash in the headlines, stock prices have been especially volatile. Moving forward, the leadership team has a big task to get Intel’s numbers headed in the right direction.

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