Boston, MA 02/04/2014 (wallstreetpr) – Intel Corporation (NASDAQ:INTC), the world’s largest chipmaker, said it will need more executives to own stock and bring bonuses in line with operating targets, strategies which aim at paying according to the company’s financial outcomes.
New pay rules
The Santa Clara, California based company wrote a letter to shareholders on Feb 3, stating that from this year onwards, 350 senior executives will be required to own a certain number of shares. As of now, this was guided for only 50 executives. The new set of guidelines is being framed under the company’s newly promoted Chief Executive Officer Brian Krzanich.
Intel Corporation (NASDAQ:INTC) said that cash bonuses for executives will be based more on the collective outcome of the business units they work for. The current weighting of that metric which is 33 % will be raised to 50% of the total calculation. There will be no minimum value for performance based stock grants and if the total shareholder returns over 3 years declines below a fixed level, no payouts will be issued.
Intel Corporation (NASDAQ:INTC) said it is looking forward to change its pay structure according to inputs it received from investors who urged the company to give compensation as per the interests of the shareholders. The chipmaker’s stock increased by 26% in 2013 as compared to the Standard & Poor’s 500 Index’s 30% profit. Sales at Intel dropped this year also, following last year’s slip.
Leader and trend setter
According to an Evercore Partners Inc. analyst in New York, Patrick Wang, Intel is going through a process of transition which demands such structural reforms in executives’ compensations so as to keep them motivated to work. Stating the change as good, Wang has a sell rating on the stock. The Director of governance research at Equilar Inc., Aaron Boyd expects more compensation reforms according to shareholders’ discussions. He said that Intel Corporation (NASDAQ:INTC) has always been a leader in this aspect of bringing executive pay and company performance in line. He further said that more and more public companies investors are going against proposals for executive pay and that Intel may be on the way of a setting a new trend.
