Intel introduces cost-cutting measures: layoffs, salary cuts, reduced bonuses

• Some Intel employees took pay cuts in 2023 to cut costs and avoid layoffs.
• Intel announced layoffs this year, which will affect stock bonuses promised to employees.
• Cost cutting has changed the status quo of benefits and benefits at Intel.

January 2023 was a different world for America’s top semiconductor companies.

Nvidia closed the month at $19.52 after reporting a 21% decline in revenue. AMD achieved a price almost four times higher than Nvidia.

Meanwhile, Intel CEO Pat Gelsinger made a rare move. He took A Salary cut by 25%. and asked most of its senior staff to make cuts of 5% to 15% as part of a comprehensive cost-cutting effort. He restored it Affected withdrawals later that year.

To make up for lost wages, the company promised a thank-you bonus in the form of one-time limited grants on storage units, worth thousands for some, two sources said. Grants will be awarded in December 2023 and entitlements will be awarded in December 2024.

Since then, there has been a changing of the guard in the chip industry as Nvidia ushered in the artificial intelligence boom. Meanwhile, there have been layoffs and buyouts at Intel, which announced in August that it would step down 15,000 employees through voluntary separation agreements and redundancies. The affected employees were scheduled to leave the company just a few months before they became eligible for the Thank You RSUs. Bonus uncertainty was one of many setbacks, along with budget cuts and layoffs, that Intel employees have had to deal with in recent years.

A new round of layoffs began earlier this month, with Gelsinger announcing: recovery plan in September to help the company become more capital intensive.

“We are implementing our previously announced cost action plan while maintaining competitive compensation and benefits programs,” an Intel spokesman said. “The actions we are taking are designed to make us a leaner, more efficient company and ensure our long-term success.”

For this report, BI spoke with eight current and former Intel employees. They asked to remain anonymous to discuss internal matters because some still work at the company.

For most employees who left voluntarily, the target end date was around September 30. The laid-off workers will largely be off their jobs by the end of November, according to WARN notices and posts from affected employees.

“We had so much hope,” one engineer said Gelsinger’s return for the company in 2021 and its action plan. “Failures are understandable, but what will leadership do?”

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“Thank you” bonuses.

After Intel announced the coming wave of layoffs in August, the company sent out a sheet of frequently asked questions to employees, referencing an existing policy that stated that unvested RSUs were forfeited and returned to the company on the last day of work. In other words, departing employees would not receive a thank you.

What followed was an “uproar,” said three Intel employees who accepted the voluntary buyout offer or were notified they would be laid off. Two departing employees said Intel employees left frustrated comments under answers to frequently asked questions on the company’s internal network.

The issue ultimately arose during a weekly question-and-answer session with Gelsinger, one of the two employees said. Under pressure, the company changed course.

According to one laid-off Intel employee, departing employees affected by the 2023 pay cuts will now receive the equivalent of the December 3 stock price and be paid on the next payday.

“Rather, it was a general outcry over the fact that, at least to uninformed people, Intel would be stripping people of their cash – especially after making so many ‘minor’ tier cuts over the last few months,” the same fired employee said.

“We were here all year and we made sacrifices,” said another former employee.

Diminishing returns

After announcing the upcoming layoffs in August, Intel sent out a slideshow announcing the cuts to employee benefits.

Intel announced it will reduce its global real estate footprint by two-thirds and consolidate its more concentrated centers, according to a slide obtained by BI. The on-site gym will no longer offer personal training services. The slide also indicated that reimbursements for internet, telephone and commuting costs would be reduced or eliminated.

In September, at least one Oregon office posted signs informing employees that fruit and drinks would no longer be free.

“It’s a small thing, right? How much does one fruit cost per day?” – one of the former employees told BI.

A current Intel employee in Oregon said their floors were recently consolidated so “we can turn off the air conditioning and lights” on the rest.

The cuts also resulted in larger benefits. An Intel employee will be entitled to four weeks of sabbatical leave after every four years of service, or eight weeks after seven years of service. The slide indicated that holiday pay had been reduced to one month after seven years of service, leaving some employees frustrated who were supposed to use it soon but now have to wait, one departing employee said.

Previously, employees could also benefit from corporate air transportation, which facilitated transportation and collaboration between some of the company’s locations in Arizona, California and Oregon. Now the transfer has been suspended.

The timing of the cuts also made it difficult to plan retirement parties for employees, which is a tradition at the company. One retired Intel employee from Oregon told BI that internal employee forums included an updated list of frequently asked questions in September for those who opted for a voluntary buyout. Employees were encouraged to initiate “happy hours” among themselves and avoid the word “celebration”, despite the tradition of using company funds for retirement parties.

“You don’t want to say, ‘Oh, we’re celebrating this person and spending money, but we’re also going to fire all these other people,’” said a longtime employee entering the buyout. “But it was still difficult to see that managers were considering just sending an e-card.”

Old benefits

Intel has long been on par with other tech giants when it comes to take-home pay.

SEC filings for Intel, AMD, Microsoft, Nvidia and Qualcomm show that median salaries have increased by at least 12% over the past five years, and in some cases much more, at all of these companies except Intel, where the median salary increased 4%.

One Intel veteran who took part in the buyout told BI that the company’s above-average benefits helped maintain employee loyalty even though wages were lower than those of some colleagues. Technology companies from across the industry were also present by cutting employee benefits.

Some Intel employeesespecially those who have been with the company for several decades come out with impressive paychecks. Two employees said they would receive 19 months of severance pay, in addition to some longevity awards and vacation benefits, which would be paid in addition.

In addition to periodic paid sabbaticals, Intel employees reached a new level of benefits when their age combined with years of service reached 55 and then 75, according to one employee. The “Rule of 75” comes from a bygone era when corporations offered generous pensions. Intel employees who joined the company before her closed its pension plan for new entries in 2011, they continue to receive payments.

Even outside of lifetime employees receiving benefits for the past decade, not all departing employees are bitter.

“Intel was generous when it didn’t have to be,” said one laid-off employee who took advantage of the severance offer.

In September, Intel shares and the company itself fell to their lowest values ​​in a decade can be deleted from the index of the largest companies – an index tracking the most stable companies. The company will publish its third quarter results on Thursday.

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Contact Helen Li at [email protected] or use the Signal app for secure messaging with the username: hliwrites.99.