Intel Corp. announced plans to freeze employee pay, including the salary of chief executive officer Paul Otellini, as sales at the giant chip maker have dipped amid the economic downturn.
Besides overhauling its employee compensation plan, Intel said it would give employees the opportunity to change “underwater,” or expensive stock options, for lower priced ones.
The moves must be approved by Intel shareholders.
"In 2008, net revenue declined slightly and net income declined 24 percent compared to 2007," the company said in its filing, according to the San Jose Mercury News. "We face a rapidly changing marketplace in which demand is shifting among mobile, desktop and server microprocessors, and the prices and margins of our products have been under pressure."
Otellini received a total compensation of $12.1 million in 2008, according to Intel’s proxy statement, with a base salary of $1 million and $3.9 million in incentive plans, in addition to over $7 million in stock and option plans.
Intel’s net income dropped 24 percent last year, Bloomberg News reports, and its share price dipped by one third.
The Santa Clara, California-based semiconductor giant joins hundreds of other companies who have proposed option-exchange programs.