Intel Announces Pay Cuts for Company’s Upper Ranks to Avoid Layoffs Following Bleak Financial Results
Intel Corporation (Nasdaq: INTC) announced to its employees on Tuesday evening that it will be slashing employee compensation after reporting disappointing financial results last week.
Pay cuts will impact the base pay of employees starting from above the mid-level ranks up to the company’s CEO. The company’s annual bonuses will remain unchanged, but other financial benefits will be affected by cost-cutting measures, including the suspension of merit raises, quarterly profit-sharing bonuses, and employee recognition programs, as well as cutting 401(k) retirement plan matching payments by half to 2.5%.
In terms of the amount of the cuts, those higher than mid-level employees will see a minimum of a 5% reduction on their base pay, vice presidents will take a 10% cut, top executives will lose 15%, while CEO Pat Gelsinger’s base pay will be slashed by 25%.
Intel’s recent financial results have been bleak, with the company reporting a 32% decrease in sales last quarter and a 40% drop in revenue expected for this quarter compared to the same period last year.
Cutting pay for higher-paid employees is the company’s way of stabilizing its finances without joining other big tech companies that have resorted to layoffs. The chipmaker seeks to cut spending by $3 billion amid declining microprocessor demand from PC manufacturers and data center operators.
“Changes are designed to impact our executive population more significantly and will help support the investments and overall workforce,” said Intel spokesperson Addy Burr in a statement.
The chipmaker lost its leading position in the industry to rivals the likes of Advanced Micro Devices Inc (Nasdaq: AMD) and NVIDIA (Nasdaq: NVDA) after an unfortunate series of manufacturing setbacks in the past few years. The company’s stock has also fallen over 42% of its value from the same period last year.
Despite the challenges, Intel remains committed to its long-term strategy and is investing billions in new factories in Arizona, Ohio, and Europe.
Intel last traded at $29.32 on the Nasdaq.
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