(Bloomberg) — Struggling with rapidly declining revenue and profits, Intel Corp. is slashing management salaries across the company to deal with the shaky economy and to conserve cash for an ambitious turnaround plan.
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The chip maker said Tuesday that CEO Pat Gelsinger will cut 25% from his base salary. His executive leadership team will see their salaries drop by 15%. Senior managers will get a 10% cut and mid-level managers will get a 5% cut. Shares of Intel rose 0.1% in premarket trading in New York on Wednesday. The stock has lost nearly half its value in the past year.
“As we continue to navigate macroeconomic headwinds and work to reduce costs across the company, we have made several adjustments to our 2023 employee rewards and rewards programs,” Intel said in a statement. “These changes are designed to impact our executive team further and will help support the investments and workforce needed to accelerate our transformation and achieve our long-term strategy.”
The move follows a grim outlook from Intel last week, when the company predicted one of the worst quarters in its more than 50-year history. Intense competition and a sharp slowdown in PC demand wiped out profits and wiped out Intel’s cash reserves. At the same time, Gelsinger wants to invest in the company’s future. He has spent two years on a turnaround effort aimed at restoring Intel’s technology leadership in the $580 billion chip industry.
Meanwhile, Gelsinger will continue to use the cash to reward shareholders. Intel said last week that it remains committed to providing a competitive dividend. Analysts speculated that the company might cut its payments to counter the slowdown.
Under Gelsinger’s plan, the company is looking forward to introducing new production technology at an unprecedented pace. It will also build new factories in Europe and the United States and try to win orders from other chip makers as an outside manufacturer. The move would put Intel in direct competition with Taiwan Semiconductor Manufacturing Co. and Samsung Electronics, two Asian companies that passed it in the chipmaker rankings in terms of size and capabilities.
Intel isn’t the only big company cutting executive salaries. Apple Inc. Inc., one of the few tech giants to forgo layoffs, has cut CEO Tim Cook’s pay by more than 40% to $49 million for 2023. Some high-profile finance firms have taken similar steps, with Goldman Sachs Group Inc.. CEO David Saw Solomon said his 2022 compensation was reduced by about 30%, to $25 million.
Intel is taking other steps to rein in expenses. That includes cutting staff and slowing spending on new plants — part of an effort to save $3 billion annually. The company said that number would swell to as much as $10 billion annually by the end of 2025.
Intel, which notified employees of the latest cuts earlier Tuesday, has reduced the matching it makes for pension contributions. The Santa Clara, California-based company thanked the employees for their patience and commitment.
Hourly workers and employees under the seventh grade in the company system will not be affected.
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