Intel cutting employee and executive pay

HockeyJon

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https://www.reuters.com/technology/...-exec-pay-amid-pc-market-downturn-2023-02-01/

Intel Corp (INTC.O) said on Tuesday that it had made broad cuts to employee and executive pay, a week after the company issued a lower-than-expected sales forecast driven by a loss of market share to rivals and a PC market downturn.

The reductions will range from 5% of base pay for mid-level employees to as much as 25% for Chief Executive Pat Gelsinger, while the company's hourly workforce's pay will not be cut, said a person familiar with the matter who was not authorized to speak publicly.

Ouch. I know they’re big enough that they’ll more than likely right the ship, but Intel needs to get their stuff together ASAP.
 
Yeah, I don't think many will care about people who normally get paid the same whether they work hard or hardly work.

Also, if AMD can survive for years while hemorrhaging money, I think Intel will come out the other aide fine.
 
aNp2zEK_460s.jpg
 
https://www.reuters.com/technology/...-exec-pay-amid-pc-market-downturn-2023-02-01/



Ouch. I know they’re big enough that they’ll more than likely right the ship, but Intel needs to get their stuff together ASAP.
Time is getting short before intel's "untouchable" dividend (at a cost of $1.5 billion last quarter) gets cut for the sake of cash flow. Then the share price will really sink.

"the company is burning through cash to support its IDM 2.0 strategy"

Is Intel's Dividend in Trouble?

 
Time is getting short before intel's "untouchable" dividend (at a cost of $1.5 billion last quarter) gets cut for the sake of cash flow. Then the share price will really sink.

"the company is burning through cash to support its IDM 2.0 strategy"

Is Intel's Dividend in Trouble?


I had the same thought. Their current yield at this price is very high, and after their last quarterly report, combined with this, a cut seems almost inevitable and they’re likely doing everything they can to avoid it for the reason you stated.
 
I will just leave this here for you to ponder.

(in thousands)

INTC Free Cash Flow TTM :
Free Cash Flow
-13,315,000

View attachment 545777


AMD Free Cash Flow TTM:
Free Cash Flow
3,408,000

View attachment 545776

It’s crazy what happens when one company sits on their laurels while a competitor revolutionizes their product.

My gut instinct remains that Intel has the size and market share to ultimately right the ship, but we’re definitely seeing the results of years of stagnation starting with Skylake while AMD completely redesigned after Bulldozer and started eating their lunch. Like if AMD can recover from Bulldozer given the state of the company at the time, I’d like to think Intel can recover from this.

It’s really crazy to compare Intel over the past few years against other companies in the space (AMD, NVDA, TSMC). It really illustrates their stagnation and bad management over that period.
 
It’s really crazy to compare Intel over the past few years against other companies in the space (AMD, NVDA, TSMC). It really illustrates their stagnation and bad management over that period.
It is difficult for a large publicly traded company to innovate. Innovation involves a lot of short term loss in order to bring home long term gains. Shareholders demand gains yesterday and get upset when they have to wait for today. They are free to jump off of the innovation ship and return only when it's about to reach its destination, so that's what they do.

The GPU market is a great example of something that would likely be good for Intel long term, but will involve losing billions in the short term. It's something they need to do, but also something that would make their shareholders abandon them.

I agree that Intel is big enough to survive, but they might end up surviving merely as a giant zombie corp akin to IBM. I mean, at a minimum, AMD simply isn't large enough to take over Intel's 80% marketshare - they literally don't have the capacity. There is a fair amount of momentum when it comes to companies and programs of this scale, however, so maybe there is still some hope. That said, what we see today comes from programs that were started 5-7 years ago. Similarly, the cuts that are happening now won't have much impact on this year's launches, but will likely affect the 2025-2027 launches.
 
Must be pretty desperate to reduce pay like that. Anything beats being layed off.
 
It is difficult for a large publicly traded company to innovate. Innovation involves a lot of short term loss in order to bring home long term gains. Shareholders demand gains yesterday and get upset when they have to wait for today. They are free to jump off of the innovation ship and return only when it's about to reach its destination, so that's what they do.

The GPU market is a great example of something that would likely be good for Intel long term, but will involve losing billions in the short term. It's something they need to do, but also something that would make their shareholders abandon them.

I agree that Intel is big enough to survive, but they might end up surviving merely as a giant zombie corp akin to IBM. I mean, at a minimum, AMD simply isn't large enough to take over Intel's 80% marketshare - they literally don't have the capacity. There is a fair amount of momentum when it comes to companies and programs of this scale, however, so maybe there is still some hope. That said, what we see today comes from programs that were started 5-7 years ago. Similarly, the cuts that are happening now won't have much impact on this year's launches, but will likely affect the 2025-2027 launches.

I’d challenge that assertion, since a lot of other big publicly traded companies have no problem innovating. Apple, Microsoft, Nvidia, Amazon, the list goes on. Intel’s problem is bad management, full stop. They got complacent because they had no real competition for years until Ryzen finally came out and now they’re paying the price.

I agree that AMD is going to have to dig deep of they want to take more share, but even AMD aside, Intel has bigger problems. Beyond AMD, they have to contend with Nvidia on the datacenter side, which was historically very lucrative for them, as many are moving increasingly to GPUs, and they have to contend with Apple launching the M-series of chips, which are beginning to make people question if continuing with x86 is worth it for them.
 
It’s crazy what happens when one company sits on their laurels while a competitor revolutionizes their product.

My gut instinct remains that Intel has the size and market share to ultimately right the ship, but we’re definitely seeing the results of years of stagnation starting with Skylake while AMD completely redesigned after Bulldozer and started eating their lunch. Like if AMD can recover from Bulldozer given the state of the company at the time, I’d like to think Intel can recover from this.

It’s really crazy to compare Intel over the past few years against other companies in the space (AMD, NVDA, TSMC). It really illustrates their stagnation and bad management over that period.

I would argue their stagnation started before Skylake. Yes Skylake is when the consumer started to notice, but Intel execs knew the problems as far back as the Sandy or Ivy bridge days. Intel's lack of innovation started to manifest for the consumer in the Haswell generation because it was the first generation that had a mid cycle refresh on 22nm because 14nm wasn't ready yet. We never really got a desktop Broadwell generation outside of a few specific chips with new technology that was abandoned by Intel, despite it being absolutely amazing for certain workloads (and ironically, basically what vcache is today).

Next is going to be mobile. All the innovation that came with the Kaby Lake G being killed shortly thereafter with the release of Zen because Intel got butthurt by AMD. Again, ruining single chip laptop cpu + gpu... it looks like AMD will be first to mass market that either this year or next for mobile, not Intel. If they can make low to mid range GPU's obsolete in laptops (or even desktops) there will be a fundamental shakeup in the mobile device market... which is one segment AMD has yet to have significant penetration.
 
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I’d challenge that assertion, since a lot of other big publicly traded companies have no problem innovating. Apple, Microsoft, Nvidia, Amazon, the list goes on. Intel’s problem is bad management, full stop. They got complacent because they had no real competition for years until Ryzen finally came out and now they’re paying the price.

On that list, only Apple and Nvidia have really innovated in the last decade. Of those two, Apple ran into exactly the problem of an activist shareholder attempt to shred the company's future in exchange for short term gains [for the shareholder alone]. Nvidia is a bit different because the founder is the CEO and the President, so it is more difficult for investors to block innovation. Nvidia's entire history has also been predicated on rapid and continuous innovation, and I think this is why the institutional holders haven't been trying to penny pinch. Intel hasn't been viewed this way in at least a couple of decades.

I agree that AMD is going to have to dig deep of they want to take more share, but even AMD aside, Intel has bigger problems. Beyond AMD, they have to contend with Nvidia on the datacenter side, which was historically very lucrative for them, as many are moving increasingly to GPUs, and they have to contend with Apple launching the M-series of chips, which are beginning to make people question if continuing with x86 is worth it for them.
I don't think AMD really is much of a worry for Intel. Having all of their markets collapse as they move out of x86 is the real danger (and will hit AMD even worse than Intel). It's exactly what you said: servers, which aren't held back by Windows, are moving to ARM and GPUs in every emerging and/or growing segment; mobile is moving to ARM; and desktop is moving to mobile. The only people who stick with Intel and AMD are the ones stuck on Windows, and that population is shrinking.
 
On that list, only Apple and Nvidia have really innovated in the last decade. Of those two, Apple ran into exactly the problem of an activist shareholder attempt to shred the company's future in exchange for short term gains [for the shareholder alone]. Nvidia is a bit different because the founder is the CEO and the President, so it is more difficult for investors to block innovation. Nvidia's entire history has also been predicated on rapid and continuous innovation, and I think this is why the institutional holders haven't been trying to penny pinch. Intel hasn't been viewed this way in at least a couple of decades.

I mean Microsoft and Amazon completely reinvented their business models with Azure and AWS, so I wouldn't say they were stagnant on innovation. I agree with everything else you said though.

I don't think AMD really is much of a worry for Intel. Having all of their markets collapse as they move out of x86 is the real danger (and will hit AMD even worse than Intel). It's exactly what you said: servers, which aren't held back by Windows, are moving to ARM and GPUs in every emerging and/or growing segment; mobile is moving to ARM; and desktop is moving to mobile. The only people who stick with Intel and AMD are the ones stuck on Windows, and that population is shrinking.

Agree here.
 
Shocks me the execs are getting a cut as well, usually those fuckers are the last in line to get any form of cut.
 
Most of the exec compensation is actually stock, so they are still milking off of the dividends at least.
 
Not crazy about cutting any employee pay at all, not sure how they expect to keep them long term. I would imagine most of those employees will start looking for other jobs. Should just fire their execs or cut their pay by at least 50 percent, clearly steering the company in the wrong direction.
 
How much do you make?

I don't know, and I don't care.

I reduced your pay by 25%, how about now?

I still don't know and I still don't care.

(the preceding was brought to you by: Normal Human Beings. We have to know how much we make.)
 
Given the tens of thousands of people being laid off at the FAANG companies, this would be a poor time.
Yeah I agree but things like this come and go in waves, if it hurts their future prospects it's not good for intel. Might help this quarter I guess, all that matters......
 
Cutting executive salaries?? Smartest thing I have heard any company do in a long time.

Agreed, especially when the company is under performing, however:

https://www.cnbc.com/amp/2023/02/01/intel-executives-take-pay-cuts-after-disastrous-earnings.html

The vast majority of Gelsinger's compensation, however, is from stock awards and options. Gelsinger's base pay was $1.25 million, according to his offer letter, or just under 0.7% of his nearly $179 million in total compensation for 2021, his first year in the top job.

So clearly Pat should be able to absorb the 25% salary cut a lot better than a dude who doesn’t get stock options and gets hit 5%. It’s good that they’re doing this to show everyone they’re going to “share the pain”, which is the right thing to do, but a 25% salary reduction is a rounding error on their total compensation plan.
 
Shocks me the execs are getting a cut as well, usually those fuckers are the last in line to get any form of cut.

Yes, but the vast majority of their total compensation is typically stock options, so a 25% cut to their salary won’t impact them a whole lot.
 
Not crazy about cutting any employee pay at all, not sure how they expect to keep them long term. I would imagine most of those employees will start looking for other jobs. Should just fire their execs or cut their pay by at least 50 percent, clearly steering the company in the wrong direction.

Agreed, but the rub is that there are layoffs going on sector-wide, so it won’t be easy to job-hop in tech right now.
 
It’s crazy what happens when one company sits on their laurels while a competitor revolutionizes their product.

My gut instinct remains that Intel has the size and market share to ultimately right the ship, but we’re definitely seeing the results of years of stagnation starting with Skylake while AMD completely redesigned after Bulldozer and started eating their lunch. Like if AMD can recover from Bulldozer given the state of the company at the time, I’d like to think Intel can recover from this.

It’s really crazy to compare Intel over the past few years against other companies in the space (AMD, NVDA, TSMC). It really illustrates their stagnation and bad management over that period.
AMD jettisoned literally everything that they werent good at and wasnt core to the company. Sold off a few units, buildings, fabs etc. Intel can last if they do the same but I doubt the will do the same thing AMD did because of their pride and ego.
 
Agreed, but the rub is that there are layoffs going on sector-wide, so it won’t be easy to job-hop in tech right now.
This. My entire team other than me was laid off 3 weeks ago and both Solidigm and Intel aren't hiring. Going to be a bit before some people are going to find work in the industry.
 
I don't think AMD really is much of a worry for Intel. Having all of their markets collapse as they move out of x86 is the real danger (and will hit AMD even worse than Intel). It's exactly what you said: servers, which aren't held back by Windows, are moving to ARM and GPUs in every emerging and/or growing segment; mobile is moving to ARM; and desktop is moving to mobile. The only people who stick with Intel and AMD are the ones stuck on Windows, and that population is shrinking.
I have been saying this for a while, AMD and Intel can trade data center clients back and forth every couple of years, it's not a terribly hard thing for them to do, but once they lose a client to ARM they are gone.
The transition to ARM involves changing workflow, libraries, and datasets, there are large hurdles in this process and it is not undergone lightly. For a client to have made that decision there must have been a VERY strong reason to do so, so if they were ever to transition back they would need an equally large reason, and unless Intel and AMD offer something overwhelmingly better I don't see that happening.
Microsoft is already getting on board for this, as one of their goals for Project Olympus was to get Windows Server running on ARM64 and CBL-Mariner already does.
 
AMD jettisoned literally everything that they werent good at and wasnt core to the company. Sold off a few units, buildings, fabs etc. Intel can last if they do the same but I doubt the will do the same thing AMD did because of their pride and ego.
No, instead they are trying to gear themselves up to open their fabs to 3'rd parties so they can make chips for other people and try to take some business from TSMC and Samsung.
Intel now has more fabs than they need, and if it can start producing chips for Qualcomm, MediaTek, and Broadcom, then it turns some of its underutilized facilities into cash cows.
I would imagine there would be a lot of issues if Intel tried to sell some of their older fabs, I am sure government agencies would be all over that.
 
Intel wanted to sell a fab to TI a couple years ago, but the catch was that TI would have to continue making the fab’s products for intel. TI passed on the offer.
 
I own a lot of Intel stock and have been watching it for several months.... I kinda want to sell it but just can't pull the trigger. I remember it wasn't that long ago it was looking like AMD was about to go bankrupt and now look at them. If they reduce the dividend I think I will sell but as long as they keep it where it's at I'll take that as a good sign and hang onto them. They're actually a little up right now just over $30/share
 
Agreed, especially when the company is under performing, however:

https://www.cnbc.com/amp/2023/02/01/intel-executives-take-pay-cuts-after-disastrous-earnings.html



So clearly Pat should be able to absorb the 25% salary cut a lot better than a dude who doesn’t get stock options and gets hit 5%. It’s good that they’re doing this to show everyone they’re going to “share the pain”, which is the right thing to do, but a 25% salary reduction is a rounding error on their total compensation plan.
Yeah.. I get what you mean.

Article said:
Intel's share price has fallen over 50% since Feb. 2021, which was his first month as CEO.
If the company stock performs poorly, they do take a pay hit. But making 80 million instead of 160 million, doesn't really hurt.

The paycuts probably appease the average investor. If you can make them "feel good" about your company again, it helps the stock value.
 
Really the CEO took a 3-5% paycut as the bulk of the pay for the upper end is in stock options that only took a 3% hit. The bulk of the cut was to employee retirement funds and investment matching programs that they cut back by half.
 
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