(Bloomberg) — Intel Corp., grappling with rapidly declining revenues and profits, is cutting executive salaries across the company to deal with a faltering economy and to preserve cash for a ambitious recovery plan.
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CEO Pat Gelsinger is taking a 25% cut from his base salary, the chipmaker announced Tuesday. Its management team will see its remuneration reduced by 15%. Senior managers will get a 10% discount and middle managers will get a 5% discount. Intel shares rose 0.1% in premarket trading in New York on Wednesday. The stock lost almost half of its value last year.
“As we continue to navigate macroeconomic headwinds and reduce costs across the company, we have made several adjustments to our employee compensation and rewards programs for 2023,” Intel said in a statement. “These changes are designed to have a more meaningful impact on our executive population and will help support the investments and overall workforce needed to accelerate our transformation and deliver on our long-term strategy.”
The move follows a gloomy outlook from Intel last week, when the company predicted one of the worst quarters in its more than 50-year history. Sharper competition and a sharp slowdown in demand for personal computers have wiped out profits and eaten away at Intel’s cash reserves. At the same time, Gelsinger wants to invest in the company’s future. It’s two years into a turnaround effort to restore Intel’s technology 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 delivering a competitive dividend. Analysts have speculated that the company may cut payouts to weather the slowdown.
Under Gelsinger’s plan, the company seeks to introduce new production technologies at an unprecedented rate. It will also build new factories in Europe and the United States and try to win orders from other chipmakers as an outsourced manufacturer. The move will put Intel in direct competition with Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co., two Asian companies that have passed it in the ranking of chipmakers by size and capabilities.
Intel isn’t the only major company to cut executive salaries. Apple Inc., one of the few tech giants to forego major layoffs, is cutting CEO Tim Cook’s salary by more than 40% to $49 million for 2023. Some top financial firms have taken action similar, with Goldman Sachs Group Inc. CEO David Solomon sees his 2022 compensation reduced by about 30% to $25 million.
Intel is taking other steps to limit spending. That includes workforce reductions and slower spending on new factories, part of an effort to save $3 billion a year. This figure will reach up to $10 billion per year by the end of 2025, the company said.
Intel, which briefed staff on the latest cuts earlier Tuesday, is also cutting the match it offers to pension contributions. The Santa Clara, Calif.-based company thanked employees for their patience and commitment.
Hourly workers and employees below the seventh level of the company system will not be affected.
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