Feb. 3 (Bloomberg) — Intel Corp., the world's largest chipmaker, said it will require more executives to own stock and tie bonuses to operating goals, moves aimed at connecting pay more closely with the company's financial performance.
Starting this year, 350 senior leaders will have to own specified amounts of shares, the Santa Clara, California-based company said today in a letter to shareholders. That's up from the 50 executives covered under existing guidelines.
Intel said it is changing its pay structure following input from investors, seeking to align its compensation with the interests of shareholders. Intel's stock rose 26 percent last year, compared with a 30 percent gain in the Standard & Poor's 500 Index. Sales slipped for a second straight year. The rules are being instituted under Chief Executive Officer Brian Krzanich, who was promoted to the company's top job in May.
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Cash bonuses for employees will be determined more by the performance of the business units they work for, Intel said. The weighting of that metric will rise to 50 percent of the total calculation from the current 33 percent, Intel said. Total net income and earnings compared with peer companies are the other two bases for calculations the company uses.
The company also said performance-based stock grants will no longer have a minimum value, and if total shareholder return over three years falls below a certain level, there will be no payout.
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