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Intel executives get bonus boost for 2003

Craig Barrett and other Intel executives saw their bonuses and stock option grants climb in 2003, but the company now faces a showdown at its shareholder meeting over options.

Craig Barrett and other Intel executives saw their bonuses and stock option grants climb in 2003, but the company now faces a showdown at its shareholder meeting over options.

Barrett, Intel's chief executive officer, earned $610,000 in regular salary in 2003, the same he earned in 2002, but his bonus jumped to $1.51 million, up from the $1.07 million bonus awarded in 2002, according to a filing with the U.S. Securities and Exchange Commission, posted Wednesday. Barrett's stock option grant rose to 1.35 million options from 584,000 options in 2002.

Similarly, Paul Otellini, president and the person who will most likely take over for Barrett next year, saw his bonus climb from $612,600 to $867,600 and his stock option grant grow from 664,000 in 2002 to 900,000 in 2003. Otellini's base salary stayed the same, at $350,000.

The filings also containted shareholder proposals that would change how Intel issues stock options. Three proposals come from union-backed pension funds. One would force the company to expense options, while a second would force the company to issue restricted stock instead of options. A third would set performance standards when executives could exercize options.

Intel opposes all three measures, but has come up with a proposal of its own that would allow shareholders to review stock option grants annually. The annual shareholder meeting takes place May 19.

Intel and many in the semiconductor market saw sales and profits rise in 2003, a stark contrast to the two previous years. Intel in particular benefited from growing demand for notebook and server chips. For all of 2003, Intel reported revenue of $30.1 billion, up 13 percent from $26.8 billion in 2002. Earnings per share were 85 cents, up 85 percent from 46 cents in 2002.

New manufacturing techniques also enabled the company to cut costs.

On the other hand, the company miscalculated when it tried to raise prices on flash memory. Instead of increasing profits, the Santa Clara, Calif.-based company lost a deal with Nokia to Samsung and overall saw its market share shrink.

Intel will likely name a new chief executive next year. Barrett, who turns 65 in August, will be required by the company's bylaws to step down as chief executive by the May 2005 stockholders meeting, although he can remain a director of the company. Otellini, who will be 54 at about that time, will then likely become chief executive. But under bylaw changes that take effect upon Barrett's retirement, Otellini will be able to hold the office only until he reaches age 60. Otellini has been at the company since getting an MBA at the University of California at Berkeley in the 1970s.

Andy Grove, chairman of the board, is currently 67 and not under any bylaw constraints to relinquish the job until he hits 72. He saw his bonus rise to $877,700 in 2003 from $755,500 the previous year. Grove also got 100,000 stock options.