Intel Corporation (NASDAQ:INTC) – struggling with the effects from a triple-whammy of a broad PC downturn, stiff competition, and a drop in in revenue and earnings – is cutting management pay across the company to save cash for a costly turnaround plan.
The Silicon Valley-based chipmaker said CEO Pat Gelsinger is taking a 25% cut to his base salary. Meanwhile, Gelsinger’s top executives will see their pay packages decrease by 15%. Senior managers will take a 10% reduction and mid-level managers a 5% cut. The company's hourly workforce's pay will not be cut, said the company.
Investors reacted to the news, sending Intel shares up 0.6% to $28.42 on the tech-dominated Nasdaq in morning trade.
“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 spokesperson Addy Burr said in a statement.
Burr added that the "changes are designed to impact our executive population more significantly and will help support the investments and overall workforce."
The pay cuts follow a gloomy outlook from Intel last week, when the company predicted one of the worst quarters in its over five-decade history. The chip giant said it expects to post a loss for the current quarter after swinging to a quarterly net loss of $664 million in the last three-months of 2022 as sales fell by nearly a third to $14 billion.
The grim outlook caused Wall Street to reset its expectations around Intel with over a dozen analysts cutting their price targets for the stock. Stifel analyst Ruben Roy noted that Intel has a “difficult road ahead” as it begins a transition phase which involves high capital intensity.
Gelsinger is two years into a “five-year turnaround assignment” aimed at restoring Intel’s technological leadership in the $580 billion chip industry.
Intel is losing market share to rival Advanced Micro Devices Inc and companies that have embraced semiconductors based on technology from British chip-design specialist Arm Ltd.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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