The Board of Directors is requesting that our stockholders vote in favor of extending the 2006 Equity Incentive Plan. The 2006 Equity Incentive Plan was approved by stockholders in 2006 with a two-year term, was re-approved by stockholders in 2007 with an additional two-year term, and is currently scheduled to terminate in 2010. If this proposal is approved, the term of the 2006 Equity Incentive Plan will extend to 2012, and 134 million shares will be added to the authorized grant amount to increase the plan total to 428 million shares. We estimate that we will have used approximately 230 million shares by May 2009 from our current authorization of 294 million shares, leaving approximately 72 million remaining shares authorized (including 8 million shares from cancellations of stock options and RSUs). We believe that this increase in shares will suffice for the 2006 Equity Incentive Plan through the proposed termination date in 2012. Consistent with our past practice, we presently expect to seek another two-year extension of the plan and additional authorized shares in 2011.

The 2006 Equity Incentive Plan is the sole active plan for providing equity incentive compensation to eligible employees and non-employee directors. The Board believes that our 2006 Equity Incentive Plan is in the best interest of stockholders and Intel, as equity awards granted under the plan help to attract, motivate, and retain talented employees and non-employee directors, align employee and stockholder interests, link employee compensation with company performance, and maintain a culture based on employee stock ownership. Equity is a significant component of total compensation for our employees. If the Compensation Committee and management granted fewer equity awards to employees, they would need to provide compensation in other forms to provide a total compensation package that is competitive with other companies. The following summary of major features of the 2006 Equity Incentive Plan is qualified in its entirety by reference to the actual text of the 2006 Equity Incentive Plan, set forth as Exhibit A.

We are seeking approval of the following amendments to the 2006 Equity Incentive Plan:

Extension of the 2006 Equity Incentive Plan to an Expiration Date of June 30, 2012.

The 2006 Equity Incentive Plan is currently scheduled to expire on June 30, 2010, and we are requesting an extension of the plan to an expiration date of June 30, 2012. With this extension, we will keep our biennial renewal cycle. We believe that this cycle provides our stockholders with the ability to evaluate and vote on the continuation of our plan on a frequent basis while maintaining the required flexibility for Intel to update its equity program and ensure a market-competitive design. As of December 27, 2008, Intel had issued awards covering approximately 128 million shares under the 2006 Equity Incentive Plan. We estimate that between January 1, 2009 and May 20, 2009, we will grant an additional 102 million shares, primarily as part of our annual employee performance review process and an "Investment Grant," as discussed in "Compensation Discussion and Analysis; Additional Investment Grants for 2009 and 2010." We estimate that as of May 20, 2009, we will have 72 million shares available to be granted under the 2006 Equity Incentive Plan. For more information, see the Equity Plan Share Reservation table in this proposal.

Addition of 134 Million Shares to Fund the 2006 Equity Incentive Plan for an Additional Two Years.

The Board is recommending the approval of an additional 134 million shares for a total authorization of 428 million shares for the 2006 Equity Incentive Plan of which a maximum of 253 million shares can be awarded as RSUs or restricted stock. We estimate that we will have granted approximately 132 million RSUs by May 2009 from our current authorization of 168 million RSUs, leaving approximately 41 million shares remaining for RSUs (includes 5 million shares from RSUs cancelled due to employee terminations). Shares of RSUs that are withheld to satisfy employee tax withholding obligations are not re-used for grants of new RSUs. Withheld shares are treated as being issued and repurchased for accounting and disclosure purposes, as they reduce the number of shares that would have been issued upon vesting, and they do not get added back into the pool of available shares for grant under the plan. Within the maximum of 253 million shares of RSUs, we request the ability to use up to 300,000 shares for employee recognition stock awards having no minimum vesting period (currently, the 2006 Equity Incentive Plan authorizes 100,000 shares for such awards). The majority of Intel's stock options will have a maximum life of seven years, but we request a maximum of 10 million stock options having a maximum life of 10 years for long-term grants.

Equity Plan Share Reservation

Approval of Proposed Amendments under Employee Stock Option Exchange Program (Option Exchange).

Under "Proposal 4: Approval of an Employee Stock Option Exchange Program" in this proxy statement, we are also proposing amendments to the 2006 Equity Incentive Plan in connection with our request that stockholders approve an employee stock option exchange program. Those amendments are described under Proposal 4 and are separate from, and not conditioned on or a part of, this request under Proposal 3 for stockholders to approve amendment and extension of the 2006 Equity Incentive Plan. As part of Proposal 4, the Board is recommending the approval of an additional 235 million shares to fund the Option Exchange. Those shares would be used for the Option Exchange only, and would be automatically cancelled to the extent not issued under stock options granted in the Option Exchange. For more information on the Option Exchange, see Proposal 4.

Clarification of Prohibition on Repricing.

We also are amending the 2006 Equity Incentive Plan to clarify that the restriction on repricing stock options and stock appreciation rights (SARs) without stockholder approval applies as well when underwater stock options are surrendered for other awards or cash. As amended, the 2006 Equity Incentive Plan expressly would provide that, other than in connection with certain adjustments in our capitalization, at any time when the purchase price of a stock option or SAR is above the market price per share of our common stock, we will not reduce the exercise price of such stock option or SAR without stockholder approval and will not exchange such award for a new award with a lower (or no) purchase price or for cash. We have not taken any of these actions in the past, but we consider it good practice to make clear in the plan provisions that this prohibition is in effect on a broad, functional basis. For more information on where we are seeking specific stockholder approval of an Option Exchange, see Proposal 4.

Approval of the 2006 Equity Incentive Plan for Purposes of Section 162(m) of the Tax Code.

The 2006 Equity Incentive Plan has been structured in such a manner that equity awards made under it can satisfy the requirements of "performance-based" compensation within the meaning of Section 162(m) of the tax code. In general, under Section 162(m) of the tax code, in order for Intel to be able to deduct compensation in excess of $1 million paid in any one year to our CEO or any of our other listed officers (other than our CFO or any officer who is not subject to U.S. income tax), such compensation must qualify as performance-based. One of the requirements of performance-based compensation for purposes of Section 162(m) of the tax code is that the material terms of the performance goals under which compensation may be paid be disclosed to and approved by stockholders. For purposes of Section 162(m) of the tax code, the material terms include the employees eligible to receive compensation, a description of the business criteria on which the performance goal is based, and the maximum amount of compensation that can be paid to an employee under the performance goal. With respect to awards under the 2006 Equity Incentive Plan, each of these issues is discussed below, and stockholder approval of the amendment and extension of the 2006 Equity Incentive Plan also will constitute re-approval of the material terms of the 2006 Equity Incentive Plan for purposes of the approval requirements of Section 162(m) of the tax code.