- Some Intel employees received pay cuts in 2023 to reduce costs and avoid layoffs.
- Intel announced layoffs this year, affecting employees' promised stock bonuses.
- Cost-cutting changed the status quo of perks and benefits at Intel.
January 2023 was a different world for the top American semiconductor companies.
Nvidia closed the month trading at $19.52 after reporting revenue down 21%. AMD traded at nearly four times the price of Nvidia.
At the time, Intel CEO Pat Gelsinger made a rare move. He took a 25% pay cut and asked much of his higher-level staff to take cuts of between 5% and 15% as part of a comprehensive cost-cutting effort. He restored the affected paychecks later that year.
To compensate for lost wages, the company promised a "thank you" bonus in the form of one-time restricted stock unit grants, worth thousands for some, two sources said. The grants would be awarded in December 2023 and vest in December 2024.
Since then, the chip industry saw a changing of the guard as Nvidia ushered in the AI boom. Meanwhile, layoffs and buyouts followed for Intel, as it announced in August that it would shed 15,000 employees via voluntary separation agreements and layoffs. The affected employees were set to leave the company just a few months before the "thank you" RSUs were vested. Uncertainty about their bonuses was one of the many setbacks, along with budget cuts and layoffs, that Intel employees had to deal with in recent years.
A new round of layoffs began earlier this month, while Gelsinger announced a turnaround plan in September to help the company become more capital-efficient.
"We are executing on our previously announced cost action plan while maintaining competitive compensation and benefits programs," an Intel spokesperson said. "The actions we are taking are intended to make us a leaner, more efficient company and position the business for long-term success."
BI spoke to eight current and former Intel employees for this report. They asked to remain anonymous to discuss internal matters as some still work at the company.
Most employees who took the voluntary severance had target end dates around September 30. Laid-off workers will largely be out by the end of November, according to WARN notices and LinkedIn posts by affected employees.
"We had so much hope," one engineer said of Gelsinger's return to the company in 2021 and his road map. "Setbacks are understandable, but what is leadership gonna do?"
'Thank you' bonuses
After Intel announced the upcoming wave of layoffs in August, the company issued employees with a sheet of FAQs, referring to an existing policy that said unvested RSUs are forfeited and returned to the company on an employee's last day. In other words, departing employees would not get their 'thank you' shares.
What followed was an "uproar," said three Intel employees who had taken the voluntary buyout offer or who had been notified they would be laid off. Intel employees left frustrated comments underneath the FAQs on the company's internal network, two departing workers said.
The issue eventually came up at a weekly Q&A with Gelsinger, one of the two employees said. Under pressure, the company changed course.
Departing employees affected by the pay cuts in 2023 will now receive a cash equivalent of the stock price on December 3 and be paid the next payday, according to one laid-off Intel worker.
"It was more a general uproar over the fact that, at least for the involuntary folks, that Intel would be screwing people out of the cash — in particular after doing so many 'petty' level cuts over the past few months," said the same laid-off employee.
"We were here that whole year and made the sacrifices," another former employee said.
Shrinking perks
Intel sent out a slideshow with information on cuts to employee benefits upon the August announcement of the coming layoffs.
Intel announced it would reduce its global real estate footprint by two-thirds and consolidate its more concentrated hubs, according to a slide obtained by BI. The gym on-site would no longer offer personal training services. The slide also said reimbursement of internet, phone, and commuting costs would be reduced or eliminated.
In September, signs went up in at least one Oregon office informing employees that fruits and beverages would no longer be free.
"That's petty, right? How much does one piece of fruit per day cost?" one former employee told BI.
A current Intel employee in Oregon said that their floors were consolidated recently so that "we can turn off the AC and lights" on the others.
The cuts impacted bigger perks, too. An Intel employee would be eligible for a four-week sabbatical after every four years of work or eight weeks after seven years. The slide said that the sabbatical benefit has been reduced to one month after seven years of service — leading to frustration from some employees who were set to take them soon and now must wait, one departing employee said.
Employees could also previously take a corporate air shuttle that facilitated transportation and collaboration between certain company sites in Arizona, California, and Oregon. Now the shuttle has been suspended.
The timing of the cuts also made it difficult to plan retirement parties for employees — a tradition at the company. One retired Oregon Intel employee told BI that the internal employee forums contained an updated list of FAQs in September for those who had chosen the voluntary buyout. Employees were encouraged to initiate happy hours among themselves and to avoid the word "celebration" despite a tradition of setting aside 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 lay off all these other people," said a long-tenured employee taking the buyout. "But it was still hard to see managers consider just sending an e-card."
Bygone benefits
Intel has long trailed other tech giants when it comes to take-home compensation.
SEC filings for Intel, AMD, Microsoft, Nvidia, and Qualcomm show median compensation over the last five years has increased at least 12% or, in some cases, much more, in all of those companies except Intel, where median compensation has increased 4%.
One Intel veteran who took the buyout told BI that the company's benefits beyond the norm helped keep employees loyal even though pay was lower than some peers. Tech companies across the industry have also been slashing employee perks.
Some Intel employees, especially those with the company for decades, are leaving with impressive payouts. Two employees said they will receive 19 months of severance pay on top of some longevity rewards and sabbatical benefits that will be paid out on top.
In addition to periodic paid sabbaticals, Intel employees reached a new tier of benefits when their age, combined with their years of service, reached 55 and then 75, according to one employee. The "Rule of 75" is of a bygone era when corporations offered hearty pensions. Intel employees who joined the company before it closed its pension plan to new entries in 2011 still get payouts.
Even beyond the lifers receiving last decade's benefits, not all departing employees are bitter.
"Intel has been generous when they did not have to be," said one laid-off employee of the severance package offered.
Intel's shares dropped to their lowest values in a decade in September, and the company may be removed from the blue-chip index—an index that tracks the most stable companies. The company reports third-quarter earnings on Thursday.
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