Intel Corp. continues to cut costs for everything except payments to investors.
Intel
INTC,
which is already in the process of cutting what is believed to be thousands of jobs amid steep declines in profit and revenue, is reducing Chief Executive Pat Gelsinger’s base salary by 25% and trimming other salaries at a descending rate based on seniority, down to 5% cuts for midlevel positions, a person familiar with the matter told MarketWatch. While nonexempt workers and junior positions face no pay cuts, Intel is trimming its 401(k) contributions to 2.5% from 5% and will suspend merit raises and quarterly performance bonuses, the person said. Annual performance bonuses and stock grants will remain.
In an emailed statement, an Intel spokesperson confirmed “several adjustments to our 2023 employee compensation and rewards programs.”
“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,” the statement said. “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. We are grateful to our employees for their commitment to Intel and patience during this time as we know these changes are not easy.”
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The move is similar to a 50% cut in stock compensation that Apple Inc.
AAPL,
CEO Tim Cook requested and received, though Apple is one of the few large Silicon Valley tech companies that has not announced layoffs yet. Intel is targeting $3 billion in cost cuts in 2023 that include hundreds of layoffs that have already been disclosed in California, with many more expected.
Intel has not touched its dividend, though, even as its free cash flow fell into the red during 2022 and is expected to be negative again this year. The chip maker paid out roughly $1.5 billion in dividends in the fourth quarter, completing $6 billion in annual payments, and maintained the same level of payments for the first quarter despite analysts questioning whether the company can afford it.
For more: Intel stock’s dividend sticks out among chip makers
“The board [and] management, we take a very disciplined approach to the capital allocation strategy and we’re going to remain committed to being very prudent around how we allocate capital for the owners, and we are committed to maintaining a competitive dividend,” Chief Financial Officer David Zinsner said when asked directly about the dividend during Intel’s earnings call last week.
Intel shares have declined 42.1% in the past 12 months, as the S&P 500
SPX,
has dropped 10.3% and the Dow Jones Industrial Average
DJIA,
— which counts Intel as one of its 30 components — has fallen 3.7%.
Source: https://www.marketwatch.com/story/intel-cuts-pay-bonuses-and-other-benefits-while-maintaining-dividend-11675279447?siteid=yhoof2&yptr=yahoo