update Intel froze pay among top executives and slashed bonuses last year, but it increased option grants.
The chipmaker faced one of its most difficult years ever in 2001, with the decline in PC sales and other markets. Though the company was able to turn a profit of $1.3 billion for the year after acquisition costs, that figure was down about 88 percent from 2000's $10.5 billion. As a result, the chipmaker paid its five top-earning executives much less in bonuses.
Though Intel roughly halved bonuses, it gave its senior executives more than double the amount of stock options, according to a proxy statement filed with the U.S. Securities and Exchange Commission on Thursday. This has been a common theme in the tech sector as companies grapple with slower sales. Many companies have held salaries the same but upped option grants.
CEO Craig Barrett received the same $575,000 salary in 2001 as he did in 2000. But his 2001 bonus of $1,075,300 was less than half the $2,784,700 he received in 2000.
The story was the same for Barrett's cohorts:
• Chairman Andy Grove's $525,000 salary stayed the same in 2001, while his 2001 bonus fell to $981,800 from $2,542,900 in 2000.
• Paul Otellini, president and chief operating officer, maintained his $300,000 salary in 2000 and 2001, but his bonus was reduced to $561,000 versus $1,293,500 in 2000.
• Les Vadasz, executive vice president of Intel Capital, received $275,000 in salary in both 2000 and 2001. His bonus shrank from $1,281,400 to $468,600.
• CFO Andy Bryant's $260,000 salary remained constant; his bonus dropped from $1,309,400 to $468,000.
While bonuses were reduced last year, Intel's senior executives received three grants of stock options during 2001, including an early merit-based grant for 2002, awarded Oct. 31.
Options broke down as follows:
• Barrett: 484,696 options in 2001 versus 200,000 in 2000
• Grove: 384,696 options in 2001 versus 200,000 in 2000
• Otellini: 357,586 versus 120,000
• Bryant: 253,704 versus 90,000
Vadasz received 335,650 options in 2001. The proxy doesn't list his grants for 2000.
Though Barrett's bonus was halved in 2001, he still cashed in. The CEO sold 544,000 shares during the year, worth $17,261,229. CFO Bryant, meanwhile, sold 144,000 shares, worth $3,325,392. The rest of the executives held on to their shares.
But gains through stock sales in 2001 paled in comparison to those of the previous year. In 2000, Barrett sold 557,952 shares to the tune of $27,653,496. Chairman Grove sold 1,344,000 shares to rake in $64,642,234.
Intel says that top executives were not the only employees given extra stock options. All employees received two extra grants in addition to the normal yearly grant in 2002. One grant was a one-time award, while the second was essentially an early distribution of employees' 2003 options, given to
help compensate for smaller-than-normal pay raises in 2001.
While top executives such as Barrett did not get a raise at all, most other employees got about half of their normal yearly raises, a representative said.