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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Intel Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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Notes:
INTEL CORPORATION
2200 Mission College Blvd.
P. O. Box 58119
Santa Clara, CA 95052-8119
(408) 765-8080
[LOGO OF INTEL]
Dear Stockholder:
Intel's 2000 Annual Meeting of Stockholders will be held on May 17, 2000 at
the Santa Clara Convention Center in Santa Clara, California, and we look
forward to your attendance either in person or by proxy. The notice of annual
meeting, the proxy statement and the proxy card from the Board of Directors
are enclosed. The materials provide further information concerning the annual
meeting. Stockholders may access the notice of annual meeting and the proxy
statement via the Internet at the Web site address indicated on the proxy
card. Some of our stockholders will be accessing these materials and voting
via the Internet and will not be receiving a paper proxy card by mail.
At this year's annual meeting, the agenda includes the annual election of
directors, a proposal to approve amendment of the company's Restated
Certificate of Incorporation to increase the number of authorized shares of
common stock from 4.5 billion to 10 billion, a proposal to approve amendment
and extension of the company's Executive Officer Bonus Plan and a proposal to
ratify appointment of our independent auditing firm. The Board of Directors
recommends that you vote FOR election of the slate of nominees for directors,
FOR the proposal to approve amendment of the company's Restated Certificate of
Incorporation to increase the number of authorized shares of common stock, FOR
approval of amendment and extension of the Executive Officer Bonus Plan and
FOR ratification of appointment of the independent auditors. Please refer to
the proxy statement for detailed information on each of the proposals. If you
have any further questions concerning the annual meeting or any of the
proposals, please contact Harris Trust and Savings Bank at (800) 298-0146
(within the U.S. and Canada) or (312) 360-5125 (outside the U.S. and Canada,
call collect), or speak with D. F. King & Co., our proxy solicitors, at (800)
487-4870 (within the U.S. and Canada) or (212) 269-5550 (outside the U.S. and
Canada, call collect).
Sincerely yours,
/s/ Andrew S. Grove
Andrew S. Grove
Chairman of the Board
Notice of 2000 Annual Meeting of Stockholders
and Proxy Statement
[LOGO OF INTEL]
[LOGO OF INTEL]
INTEL CORPORATION
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Notice of Annual Meeting of Stockholders
May 17, 2000
10:00 a.m. Pacific Time
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Dear Stockholder:
You are cordially invited to attend the 2000 Annual Meeting of Stockholders
of Intel Corporation which will be held on May 17, 2000 at the Santa Clara
Convention Center, Santa Clara, California, at 10:00 a.m. Pacific Time. A map
to the location appears on the back cover of the proxy statement. The annual
meeting is being held for the following purposes:
1. To elect a Board of Directors to hold office until the next annual
meeting of stockholders or until their respective successors have been
elected or appointed.
2. To approve amendment of the company's Restated Certificate of
Incorporation to increase the number of authorized shares of common
stock from 4.5 billion to 10 billion.
3. To approve amendment and extension of the company's Executive Officer
Bonus Plan.
4. To ratify the appointment of the accounting firm of Ernst & Young LLP as
independent auditors for the company for the current year.
5. To transact such other business as may properly come before the annual
meeting or any adjournment or postponement thereof.
These items are fully discussed in the following pages, which are made part
of this notice. Only stockholders of record on the books of the company at the
close of business on March 20, 2000 will be entitled to vote at the annual
meeting. A list of stockholders entitled to vote will be available for
inspection at the offices of the company, 2200 Mission College Blvd., Santa
Clara, California 95052-8119, for 10 days prior to the annual meeting.
The company requests that you vote your shares as promptly as possible. You
may vote your shares in a number of ways. You may mark your votes, date, sign
and return the proxy card or voting instruction form. If you have shares
registered directly with the company's transfer agent, Harris Trust and
Savings Bank ("Harris Bank"), you may choose to vote those shares via the
Internet at Harris Bank's voting Web site (www.harrisbank.com/wproxy), or you
may vote telephonically, within the U.S. and Canada only, by calling Harris
Bank at (888) 266-6795 (toll-free). If you hold Intel shares with a broker or
bank, you may also be eligible to vote via the Internet or to vote
telephonically if your broker or bank participates in the proxy voting program
provided by ADP Investor Communication Services. If your Intel shares are held
in an account with a broker or a bank participating in the ADP Investor
Communication Services program, you may choose to vote those shares via the
Internet at ADP Investor Communication Services' voting Web site
(www.proxyvote.com) or telephonically by calling the telephone number shown on
your voting form. See "Voting Via the Internet or By Telephone" in the proxy
statement for further details.
THE BOARD OF DIRECTORS
/s/ F. Thomas Dunlap, Jr.
By: F. THOMAS DUNLAP, JR.
Secretary
Santa Clara, California
April 12, 2000
DOORS WILL OPEN AT 9:30 a.m.
TABLE OF CONTENTS
Page
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Notice of Annual Meeting of Stockholders
Proxy Statement
Proposal 1: Election of Directors....................................... 2
Board Committees and Meetings........................................... 6
Corporate Governance Guidelines and Policies............................ 7
Directors' Compensation................................................. 8
Security Ownership of Certain Beneficial Owners and Management.......... 9
Stock Price Performance Graph........................................... 10
Report of the Compensation Committee on Executive Compensation.......... 11
Compensation Committee Interlocks and Insider Participation............. 15
Employment Contracts and Change of Control Arrangements................. 15
Executive Compensation.................................................. 16
Proposal 2: Amendment of the Company's Restated Certificate of
Incorporation to Increase the Number of Authorized Shares of Common
Stock from 4.5 Billion to 10 Billion................................... 18
Proposal 3: Approval of Amendment and Extension of the Company's
Executive Officer Bonus Plan........................................... 20
Proposal 4: Ratification of Selection of Independent Auditors........... 23
Other Matters........................................................... 23
Voting Via the Internet or By Telephone................................. 25
Exhibit A--Intel Corporation Executive Officer Bonus Plan............... 26
Communicating with the Company............................................ 27
Directions to the Santa Clara Convention Center..................... Back Cover
VOTING THE PROXY CARD
If you wish to vote on the paper proxy card instead of via the Internet or
by telephone, please complete, sign, date and return the accompanying proxy
card promptly in the enclosed addressed envelope. Postage need not be affixed
to the envelope if mailed in the United States.
The immediate return of your proxy will be of great assistance in preparing
for the annual meeting and is therefore urgently requested, even if you plan
to attend the annual meeting. If you attend the annual meeting and have made
arrangements to vote in person, your proxy card will not be used.
VOTING ELECTRONICALLY OR BY TELEPHONE
Instead of submitting your proxy vote with the paper proxy card, you may be
able to vote electronically via the Internet or by telephone. See "Voting Via
the Internet or By Telephone" on page 25 of the proxy statement for further
details. Please note that there are separate Internet and telephone voting
arrangements, depending upon whether shares are registered in your name or in
the name of a broker or bank.
IF YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON
The annual meeting will be held at 10:00 a.m. Pacific Time on May 17, 2000
at the Santa Clara Convention Center, Santa Clara, California, located at the
corner of Great America Parkway and Tasman Drive. A map to the Convention
Center is printed on the back cover of this proxy statement. Signs will direct
you to the conference room where the annual meeting will be held. Please note
that the doors to the meeting room at the Convention Center will not open for
admission until 9:30 a.m.
If your shares are not registered in your own name and you plan to attend
the annual meeting and vote your shares in person, you should contact your
broker or agent in whose name your shares are registered to obtain a broker's
proxy and bring it to the annual meeting in order to vote.
[LOGO OF INTEL]
INTEL CORPORATION
2200 Mission College Blvd.
Santa Clara, CA 95052-8119
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PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Intel
Corporation for use in voting at the Annual Meeting of Stockholders to be held
at the Santa Clara Convention Center, Santa Clara, California, on Wednesday,
May 17, 2000, at 10:00 a.m. Pacific Time, and at any postponement or
adjournment thereof, for the purposes set forth in the attached notice of
annual meeting.
Voting and Revocability of Proxies
When proxies are properly dated, executed and returned, the shares they
represent will be voted at the annual meeting in accordance with the
instructions of the stockholder. If no specific instructions are given, the
shares represented by proxies will be voted as follows:
. FOR the election of the nominees for directors set forth herein,
. FOR approval of amendment to the company's Restated Certificate of
Incorporation to increase the number of authorized shares of common
stock from 4.5 billion to 10 billion,
. FOR approval of amendment and extension of the company's Executive
Officer Bonus Plan and
. FOR ratification of the appointment of auditors.
In addition, if other matters come before the annual meeting, the persons
named in the accompanying form of proxy will vote in accordance with their
best judgment with respect to such matters. A stockholder giving a proxy has
the power to revoke it at any time prior to its exercise by voting in person
at the annual meeting, by giving written notice to the Secretary of the
company prior to the annual meeting or by giving a later dated proxy.
If you are a participant in the company's 401(k) Savings Plan, the proxy
represents the number of shares in your plan account as well as other shares
registered in your name. For those shares in your plan account, the proxy will
serve as a voting instruction for the trustee of the plan. If voting
instructions are not received by the trustee for shares in your plan account,
the trustee will not be able to vote those shares on your behalf.
Each share of Intel common stock outstanding on the record date will be
entitled to one vote on all matters. The 11 candidates for election as
directors at the annual meeting who receive the highest number of affirmative
votes will be elected. Amendment of the Restated Certificate of Incorporation
to increase the number of authorized shares of common stock will require the
affirmative vote of a majority of the company's outstanding common stock, and
amendment and extension of the Executive Officer Bonus Plan and ratification
of the independent auditors for the company for the current year will each
require the affirmative vote of a majority of the shares of the company's
common stock present or represented and entitled to vote at the annual
meeting. Because abstentions with respect to any matter are treated as shares
present or represented and entitled to vote for the purposes of determining
whether that matter has been approved by the stockholders, abstentions have
the same effect as negative votes for each proposal other than the election of
directors. Broker non-votes are not counted or deemed to be present or
represented for purposes of determining whether stockholder approval of a
matter has been obtained, but they are counted as present for purposes of
determining the existence of a quorum at the annual meeting.
1
Record Date and Share Ownership
Only stockholders of record on the books of the company at the close of
business on March 20, 2000 will be entitled to vote at the annual meeting.
Presence in person or by proxy of a majority of the shares of common stock
outstanding on the record date is required for a quorum. As of the close of
business on February 25, 2000, the company had 3,342,062,761 outstanding
shares of common stock. Copies of this proxy statement were first released to
stockholders on April 12, 2000.
PROPOSAL 1: ELECTION OF DIRECTORS
Unless marked otherwise, proxies received will be voted FOR the election of
each of the nominees named below. Each of the current directors has been
nominated for election to the Board of Directors. If any such nominee is
unable or unwilling to serve as a nominee for the office of director at the
time of the annual meeting, the proxies may be voted either (i) for a
substitute nominee who shall be designated by the proxy holders or by the
present Board of Directors to fill such vacancy or (ii) for the balance of the
nominees, leaving a vacancy. Alternatively, the size of the Board may be
reduced accordingly. The Board of Directors has no reason to believe that any
of the following nominees will be unwilling or unable to serve if elected as a
director. Such persons have been nominated to serve until the next annual
meeting of stockholders following the 2000 annual meeting or until their
successors, if any, are elected or appointed. The Board of Directors
recommends a vote "FOR" the election of each of the nominees listed below.
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Craig R. Barrett Craig R. Barrett has been President of Intel
60 Years Old since 1997, Chief Executive Officer since
Director Since 1992 1998 and a director of the company since
President and Chief 1992. Dr. Barrett joined the company in 1975.
Executive Officer of In 1984, he was elected Vice President and in
the Company 1985, he became Vice President and General
Manager of the Components Technology and
Manufacturing Group. Dr. Barrett became a
Senior Vice President in 1987 and General
Manager of the Microcomputer Components Group
in 1989. He was an Executive Vice President
from 1990 to 1997 and Chief Operating Officer
from 1993 to 1998. Dr. Barrett is also a
director of U.S. West, Inc. and a member of
the National Academy of Engineering.
[PHOTO OF CRAIG R. BARRETT]
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John P. Browne John P. Browne has been a director of Intel
52 Years Old since 1997. He has been a Managing Director
Director Since 1997 since 1991 and Group Chief Executive since
Group Chief 1995 of BP Amoco p.l.c., a provider of energy
Executive of BP and petrochemicals. Mr. Browne is also a
Amoco p.l.c. director of the Goldman Sachs Group, Inc., a
member of the Supervisory Board of
DaimlerChrysler AG and a Trustee of the
British Museum. He is a Fellow of the Royal
Academy of Engineering in the United Kingdom,
a Fellow of the Institute of Mining and
Metallurgy, a Fellow of the Institute of
Physics, an Honorary Fellow of the Institute
of Chemical Engineers and an Honorary Fellow
of St. John's College, Cambridge. Mr. Browne
is also Emeritus Chairman of the Advisory
Board of the Graduate School of Business,
Stanford University, a trustee of The
Conference Board, Inc. and a Vice President
and Member of the Board of the Prince of
Wales Business Leaders Forum.
[PHOTO OF JOHN P. BROWNE]
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2
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Winston H. Chen Winston H. Chen has been a director of Intel
58 Years Old since 1993 and is Chairman of the Audit
Director Since 1993 Committee of the Board of Directors. He is
Chairman of Chairman of Paramitas Foundation, a
Paramitas Foundation charitable foundation. Between 1978 and 1994,
he held several positions, including
President, Chief Executive Officer and
Chairman of the Board of Directors, at
Solectron Corporation, an electronics
contract manufacturer in Milpitas,
California. Dr. Chen continues as a director
of Solectron. He is also a director of Edison
International and a member of the Board of
Trustees of Santa Clara University and the
Board of Trustees of Stanford University.
[PHOTO OF WINSTON H. CHEN]
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Andrew S. Grove Andrew S. Grove has been a director of Intel
63 Years Old since 1974 and Chairman of the Board since
Director Since 1974 1997. Dr. Grove participated in founding the
Chairman of the company in 1968 and served as Vice President
Board of the Company and Director of Operations through 1974. He
became Executive Vice President in 1975 and
was Chief Operating Officer from 1976 to
1987. Dr. Grove was President from 1979 to
1997 and Chief Executive Officer from 1987 to
1998. He is a part-time Lecturer at the
Graduate School of Business, Stanford
University, and a director of CaP CURE and
the International Rescue Committee. Dr. Grove
is also a member of the National Academy of
Engineering and a Fellow of the Institute of
Electrical and Electronic Engineers ("IEEE").
[PHOTO OF ANDREW S. GROVE]
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D. James Guzy D. James Guzy has been a director of Intel
64 Years Old since 1969 and is Chairman of the Nominating
Director Since 1969 Committee of the Board. Since 1969, he has
Chairman of Arbor been Chairman of Arbor Company, a limited
Company partnership engaged in the electronics and
computer industry. Mr. Guzy is also Chairman
of the Board of PLX Technology, Inc. and a
director of Cirrus Logic, Inc., Micro
Component Technology, Inc., Novellus Systems,
Inc., Davis Selected Group of Mutual Funds
and Alliance Capital Management Technology
Fund.
[PHOTO OF D. JAMES GUZY]
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Gordon E. Moore Gordon E. Moore has been a director of Intel
71 Years Old since 1968 and Chairman Emeritus of the Board
Director Since 1968 since 1997. Dr. Moore serves as Chairman of
Chairman Emeritus of the Executive Committee and of the Finance
the Board of the Committee of the Board. He co-founded the
Company company in 1968 and has served on the Board
since that time. Prior to 1975, he served as
Executive Vice President. Between 1975 and
1979, Dr. Moore served as President, and
between 1975 and 1987, he served as Chief
Executive Officer. Dr. Moore served as
Chairman of the Board from 1979 to 1997.
Currently, he is also a director of Gilead
Sciences, Inc. In addition, Dr. Moore is
Chairman of the Board of Trustees of the
California Institute of Technology, a member
of the National Academy of Engineering, a
Fellow of the IEEE and a member of the Board
of Directors of Conservation International.
[PHOTO OF GORDON E. MOORE]
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3
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David S. Pottruck David S. Pottruck has been a director of
51 Years Old Intel since 1998. Mr. Pottruck is President
Director Since 1998 and Co-Chief Executive Officer of The Charles
President and Co- Schwab Corporation, a financial services
Chief Executive provider. Mr. Pottruck is a member of the
Officer of Board of Governors of the National
The Charles Schwab Association of Securities Dealers and is also
Corporation a director of McKesson HBOC, Preview Travel,
Inc., Bay Area Sports Organizing Committee
and the U.S. Ski and Snowboard Team
Foundation. He is a trustee of the University
of Pennsylvania.
[PHOTO OF DAVID S. POTTRUCK]
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Jane E. Shaw Jane E. Shaw has been a director of Intel
61 Years Old since 1993 and is Chairman of the
Director Since 1993 Compensation Committee of the Board. Dr. Shaw
Chairman and Chief is Chairman and Chief Executive Officer of
Executive Officer of AeroGen, Inc., a private company specializing
AeroGen, Inc. in controlled delivery of drugs to the lungs.
She founded The Stable Network, a
biopharmaceutical consulting company, in
1995. She was President and Chief Operating
Officer of ALZA Corporation, a drug delivery
company, from 1987 to 1994. Dr. Shaw is
currently Chairman of the Board of
IntraBiotics Pharmaceuticals, Inc. and a
director of Aviron, McKesson HBOC and Boise
Cascade Corporation.
[PHOTO OF JANE E. SHAW]
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Leslie L. Vadasz Leslie L. Vadasz has been a director of Intel
63 Years Old since 1988 and has been Executive Vice
Director Since 1988 President and President, Intel Capital
Executive Vice (formerly Corporate Business Development),
President since January 2000. Intel Capital is
and President, Intel responsible for the company's strategic
Capital investment programs. Mr. Vadasz joined the
company in 1968 when it was founded and has
held various positions at Intel since that
date. Mr. Vadasz was Senior Vice President of
the company and Director of Corporate
Business Development from 1991 to January
2000. He is a Fellow of the IEEE.
[PHOTO OF LESLIE L. VADASZ]
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David B. Yoffie David B. Yoffie has been a director of Intel
45 Years Old since 1989. He is Lead Independent Director
Director Since 1989 and Chairman of the Corporate Governance
Professor of Committee of the Board. He has been the Max &
International Doris Starr Professor of International
Business Business Administration at the Harvard
Administration, Business School since 1993 and has been on
Harvard Business the Harvard University faculty since 1981. He
School is also a director of the National Bureau of
Economic Research.
[PHOTO OF DAVID B. YOFFIE]
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4
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Charles E. Young Charles E. Young has been a director of Intel
68 Years Old since 1974. He currently serves as Interim
Director Since 1974 President of the University of Florida and is
Interim President of Chancellor Emeritus of the University of
the University of California at Los Angeles. Dr. Young served
Florida as Chancellor of the University of California
at Los Angeles from 1968 to 1997. He is a
director of Nicholas-Applegate Fund, Inc. and
a trustee of Nicholas-Applegate Mutual Funds
and Student Advantage, Inc.
[PHOTO OF CHARLES E. YOUNG]
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Except as noted above, each of the nominees has been engaged in the
principal occupation set forth above during the past five years. There are no
family relationships among any directors or executive officers of the company.
Stock ownership information is shown under the heading "Security Ownership of
Certain Beneficial Owners and Management" and is based upon information
furnished by the respective individuals.
Directors Emeriti
The following former directors of the company have been elected by the
Board to serve as Directors Emeriti. Directors Emeriti are eligible to attend
Board and committee meetings, but they do not have voting rights.
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Max Palevsky Max Palevsky is a self-employed industrialist and was a
75 Years Old director of Intel from 1968 to 1997. In 1961, Mr.
Director Emeritus Palevsky founded Scientific Data Systems, Inc., which was
Since 1997 acquired by Xerox Corporation in 1969, at which time he
Self-Employed became a director and Chairman of the Executive Committee
Industrialist of Xerox Corporation. He retired as a director of Xerox
Corporation in 1972. Mr. Palevsky's term as Director
Emeritus will end in May 2000.
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Arthur Rock Arthur Rock is a principal of Arthur Rock and Company, a
73 Years Old venture capital firm, and was a director of Intel from
Director Emeritus 1968 to 1999. He is also a director of Echelon
Since 1999 Corporation, a Life Trustee of the California Institute
Venture Capitalist of Technology and a member of the Board of Governors of
the National Association of Securities Dealers.
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5
BOARD COMMITTEES AND MEETINGS
The company currently has standing Executive, Audit, Finance, Nominating,
Corporate Governance and Compensation Committees of the Board of Directors.
Each of these committees has a written charter that has been approved by the
Board. The members of the committees are identified in the following table.
Corporate
Director Executive Audit Finance Nominating Governance Compensation
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C. Barrett X
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J. Browne X X
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W. Chen Chair X
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A. Grove X
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J. Guzy X Chair X
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G. Moore Chair Chair
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D. Pottruck X X X
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J. Shaw X X Chair
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L. Vadasz
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D. Yoffie X X X Chair
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C. Young X X X
The Executive Committee may exercise the authority of the Board between
Board meetings, except to the extent that the Board has delegated authority to
another committee or to other persons, and except as limited by Delaware law.
The Executive Committee did not hold any meetings in 1999.
During 1999, the former Audit & Finance Committee was divided into two
separate committees, the Audit Committee and the Finance Committee. In 1999,
the Audit & Finance Committee held two meetings, the Audit Committee held one
additional, separate meeting, and the Finance Committee held four additional,
separate meetings.
The Audit Committee and the Board have ultimate authority and
responsibility to select, evaluate and, when appropriate, replace the
company's independent auditors. The Audit Committee recommends for approval by
the Board of Directors an independent firm of certified public accountants
whose duty it is to audit the financial statements of the company for the
fiscal year in which they are appointed. The Audit Committee monitors the
activities of the company's internal and external auditors, including the
audit scope, the external audit fees, auditor independence matters and the
extent to which the independent auditors may be retained to perform advisory
services. The Audit Committee also reviews the results of the internal and
external audit work to assess the adequacy and appropriateness of the
company's financial and accounting controls. The Audit Committee reviews
changes in accounting standards that impact the financial statements and
discusses with management major events, including legal matters and tax
audits, that may have significant financial impact or are the subject of
discussions with the independent auditors. In addition, the Audit Committee
oversees the company's internal compliance programs. The composition of the
Audit Committee and the attributes of its members, and the responsibilities of
the Audit Committee as reflected in its charter, are intended to be in accord
with Securities and Exchange Commission rules and Nasdaq listing requirements
adopted in December 1999 with regard to corporate audit committees.
The Finance Committee reviews and recommends matters related to the
company's capital structure, including issuance and restructuring of debt and
equity securities; the company's dividend policy and dividend declarations;
banking arrangements, including investments of corporate cash; and management
of the corporate debt structure. In addition, the Finance Committee reviews
and approves structured finance and other cash management transactions whose
authorization is not otherwise approved by the Board of Directors or delegated
to the company's management.
6
The Nominating Committee makes recommendations to the Board regarding the
size and composition of the Board. The Nominating Committee establishes
procedures for the nomination process, recommends candidates for election to
the Board of Directors and nominates officers for election by the Board. The
Nominating Committee held one meeting during 1999. The Nominating Committee
will consider nominees proposed by the stockholders. Any stockholder who
wishes to recommend a prospective nominee for the Board of Directors for the
Nominating Committee's consideration may do so by giving the candidate's name
and qualifications in writing to the Secretary of the company at the following
address: M/S SC4-203, 2200 Mission College Blvd., Santa Clara, California
95052-8119.
The Corporate Governance Committee reviews and reports to the Board on a
periodic basis with regard to matters of corporate governance. The Corporate
Governance Committee also reviews and assesses the effectiveness of the
Board's Guidelines on Significant Corporate Governance Issues and recommends
to the Board proposed revisions thereto. In addition, the Corporate Governance
Committee makes recommendations to the Board regarding the agenda for the
company's annual meetings of stockholders and reviews stockholder proposals
and makes recommendations to the Board for action on such proposals. The
Corporate Governance Committee held one meeting during 1999.
The Compensation Committee administers the company's stock option plans,
including the review and grant of stock options to officers and other
employees under the company's stock option plans. The Compensation Committee
also reviews and approves various other company compensation policies and
matters, and reviews and approves salaries and other matters relating to
compensation of the executive officers of the company. The Compensation
Committee held one meeting during 1999.
The Board of Directors held eight meetings during 1999. Each director is
expected to attend each meeting of the Board and those committees on which he
or she serves. In addition to meetings, the Board and its committees review
and act upon matters through written consent procedures. No director attended
less than 75% of all the meetings of the Board and those committees on which
he or she served in 1999.
CORPORATE GOVERNANCE GUIDELINES AND POLICIES
The Board of Directors has adopted Guidelines on Significant Corporate
Governance Issues ("Corporate Governance Guidelines") and the Board's
Corporate Governance Committee is responsible for overseeing the Corporate
Governance Guidelines and reporting and making recommendations to the Board
concerning corporate governance matters. Among other matters, the Board's
Corporate Governance Guidelines include the following:
. A majority of the members of the Board of Directors are independent
directors, as defined in the applicable rules for Nasdaq-traded issuers.
Independent directors do not receive consulting, legal or other fees
from the company other than Board compensation.
. Directors stand for re-election every year. Directors may not stand for
re-election after age 72.
. Members of Board committees are appointed by the Board.
. The Audit, Nominating, Compensation and Corporate Governance Committees
consist entirely of independent directors.
. The Board has a process whereby the Board and its members are subject to
periodic self-evaluation and assessment.
. The Board no less than annually reviews the company's strategic long-
range plan, business unit initiatives, capital projects and budget
matters.
. The Board has established the position of Lead Independent Director,
which is currently held by Dr. Yoffie. Independent directors meet on a
regular basis apart from other Board members and management
representatives, and the Lead Independent Director is responsible for
setting the agenda and running these meetings.
7
. Succession planning and management development are reported periodically
by the Chief Executive Officer to the Board.
. The Board evaluates the performance of the Chief Executive Officer and
other senior management personnel at least annually.
. Incentive compensation plans link pay directly and objectively to
measured financial goals set in advance by the Compensation Committee.
For additional information, see "Report of the Compensation Committee on
Executive Compensation."
The Corporate Governance Guidelines are published on the Internet at the
company's Investor Relations Web site (www.intc.com).
DIRECTORS' COMPENSATION
Directors who are company employees receive no additional or special
remuneration for serving as directors. Each of the non-employee directors was
paid a retainer fee of $24,000 in 1999. In addition, non-employee directors
receive a fee of $4,000 plus out-of-pocket expenses for each regular Board of
Directors meeting attended. Non-employee directors also receive a fee of $500
for each special telephonic Board of Directors meeting attended. Mr. Yoffie
received an additional $3,000 in 1999 as Lead Independent Director.
Non-employee directors are also granted stock options by the company. In
accordance with the company's 1984 Stock Option Plan, option grants to non-
employee directors may not exceed 20,000 shares per director per year, and the
exercise price of the options must be equal to the fair market value on the
date of grant. During 1999, each non-employee director was granted an option
to purchase a total of 7,500 shares at an exercise price of $58.78 per share.
In addition, upon joining the Board in January 1999, Mr. Pottruck received an
initial option grant of 10,000 shares at an exercise price of $67.16 per
share. Non-employee director options are exercisable in full one year from the
date of grant.
The company has a deferred compensation plan for non-employee directors.
Under this plan, non-employee directors may elect to defer up to 100% of their
annual retainer, meeting fees and the fee for acting as Lead Independent
Director, and receive an investment return on the deferred funds as if the
funds were invested in the company's common stock. Non-employee directors
participating in the plan may make irrevocable elections to receive the
deferred funds in a lump sum or in equal annual installments over 5 years or
10 years, and to begin receiving distributions at retirement or at the earlier
of retirement and a date specified at the time of the election, which cannot
be less than 24 months from the election date. This deferred non-employee
director compensation is an unsecured obligation of the company. Dr. Yoffie
participated in the deferred compensation plan for 1999.
In 1998, the Board terminated its retirement program for non-employee
directors. The retirement program provided a retirement benefit to any non-
employee director who had at least 10 years of service or who retired after
the age of 65 with at least 5 years of service. Previously retired non-
employee directors were unaffected by the termination, and all non-employee
directors serving at the time of termination were vested with the number of
years served (regardless of whether they had met the previous vesting
requirements). No further years of service will accrue for purposes of
retirement benefits. Directors vested under the program receive an annual
benefit equal to the annual retainer fee in effect at the time of payment, to
be paid beginning at commencement of retirement and continuing for the lesser
of the number of years served as a non-employee director or the life of the
director. In 1999, Messrs. Palevsky and Rock, and Richard Hodgson and Sanford
Kaplan, former directors of the company, each was paid $24,000 under the
program.
8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
To the company's knowledge, the following sets forth information regarding
ownership of the company's outstanding common stock on February 25, 2000 by
(i) beneficial owners of more than 5% of the outstanding shares of common
stock, (ii) each director, director emeritus and named executive officer, and
(iii) all directors, directors emeriti and all executive officers as a group.
Except as otherwise indicated below and subject to applicable community
property laws, each owner has sole voting and sole investment powers with
respect to the stock listed.
Number of Shares of
Common Stock
Beneficially Owned Percent of
Stockholder at February 25, 2000 Class
- ----------- -------------------- ----------
Gordon E. Moore, Director and Chairman
Emeritus................................. 177,325,199 (1) 5.3%
Craig R. Barrett, Director, President and
Chief Executive Officer.................. 2,568,703 (2) *
John P. Browne, Director.................. 30,800 (3) *
Winston H. Chen, Director................. 490,000 (4) *
Andrew S. Grove, Director and Chairman.... 5,345,753 (5) *
D. James Guzy, Director................... 6,566,176 (6) *
David S. Pottruck, Director............... 94,200 (7) *
Jane E. Shaw, Director.................... 328,098 (8) *
Leslie L. Vadasz, Director and Executive
Vice President........................... 3,290,317 (9) *
David B. Yoffie, Director................. 203,200 (10) *
Charles E. Young, Director................ 21,800 (11) *
Arthur Rock, Director Emeritus............ 10,497,018 (12) *
Max Palevsky, Director Emeritus........... 512,738 *
Paul S. Otellini, Executive Vice
President................................ 1,139,086 (13) *
Gerhard H. Parker, Executive Vice
President................................ 962,588 (14) *
All directors, directors emeriti and all
executive officers as a group
(21 individuals)......................... 211,788,052 (15) 6.3%
- -------
* Less than 1%.
(1) Includes 240,600 shares held in trusts established for the benefit of Dr.
Moore's spouse, as to which Dr. Moore disclaims beneficial ownership.
(2) Includes outstanding options to purchase 1,248,000 shares, which were
exercisable as of February 25, 2000, or within 60 days from such date.
(3) Includes outstanding options to purchase 30,000 shares, which were
exercisable as of February 25, 2000, or within 60 days from such date.
(4) Includes outstanding options to purchase 320,000 shares, which were
exercisable as of February 25, 2000, or within 60 days from such date.
(5) Includes outstanding options to purchase 564,000 shares, which were
exercisable as of February 25, 2000, or within 60 days from such date.
Also includes 733,800 shares owned by a private charitable foundation, as
to which Dr. Grove shares asset voting and disposition authority. Dr.
Grove does not have a pecuniary interest in the shares held by the
foundation.
(6) Includes 6,164,640 shares held by the Arbor Company of which Mr. Guzy is
a general partner. Also includes outstanding options to purchase 80,000
shares, which were exercisable as of February 25, 2000, or within 60 days
from such date.
(7) Includes outstanding options to purchase 10,000 shares, which were
exercisable as of February 25, 2000 or within 60 days from such date.
Includes 400 shares held by Mr. Pottruck's daughter and 1,000 shares held
by Mr. Pottruck's son. Includes an aggregate of 12,600 shares held in
three separate annuity trusts for the benefit of Mr. Pottruck's brother
and 6,250 shares held in a limited liability partnership for which
Mr. Pottruck has asset voting and disposition authority. Also includes
20,000 shares owned by three separate trusts. The beneficiary of such
trusts is a private charitable foundation for which Mr. Pottruck shares
asset voting and disposition authority. Also includes 20,000 shares owned
by such private charitable foundation. Mr. Pottruck does not have a
pecuniary interest in the shares held by the private charitable
foundation or the aforementioned trusts established for the benefit of
such foundation.
(8) Includes outstanding options to purchase 312,000 shares, which were
exercisable as of February 25, 2000, or within 60 days from such date.
(9) Includes outstanding options to purchase 278,208 shares, which were
exercisable as of February 25, 2000, or within 60 days from such date.
(10) Includes outstanding options to purchase 200,000 shares, which were
exercisable as of February 25, 2000, or within 60 days from such date.
(11) Includes outstanding options to purchase 20,000 shares, which were
exercisable as of February 25, 2000, or within 60 days from such date.
(12) Includes 3,840 shares held by Mr. Rock's spouse, as to which Mr. Rock
disclaims any beneficial interest because he does not have voting or
disposition authority for such shares. Also includes outstanding options
to purchase 120,000 shares, which were exercisable as of February 25,
2000, or within 60 days from such date.
(13) Includes outstanding options to purchase 976,250 shares, which were
exercisable as of February 25, 2000, or within 60 days from such date.
(14) Includes outstanding options to purchase 589,696 shares, which were
exercisable as of February 25, 2000, or within 60 days from such date.
(15) Includes outstanding options to purchase 6,283,268 shares, which were
exercisable as of February 25, 2000, or within 60 days from such date.
9
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return on Intel common stock against the cumulative total return of the S&P 500
Index and the Dow Jones Technology Index for the period of five fiscal years
commencing December 31, 1994 and ending December 25, 1999. The graph and table
assume that $100 was invested on December 31, 1994 in each of Intel common
stock, the S&P 500 Index and the Dow Jones Technology Index, and that all
dividends were reinvested. This data was furnished by Standard & Poor's
Compustat Services, Inc. and Dow Jones and Company, Inc. Cumulative total
stockholder return for Intel common stock and the Dow Jones Technology Index
are based on Intel's fiscal year. Cumulative total stockholder return for the
S&P 500 Index is based on a calendar year.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN AMONG INTEL,
THE S&P 500 INDEX AND THE DOW JONES TECHNOLOGY INDEX
[STOCK PRICE PERFORMANCE GRAPH]
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ------
Intel Corporation............................... $100 $178 $426 $447 $789 $1,051
S&P 500 Index................................... $100 $138 $169 $226 $290 $ 351
Dow Jones Technology Index...................... $100 $142 $186 $217 $367 $ 604
10
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors administers the
company's executive compensation program. In this regard, the role of the
Compensation Committee, which is comprised entirely of outside, non-employee
directors, is to review and approve salaries and other compensation of the
executive officers of the company and to administer the Executive Officer
Bonus Plan (the "EOBP"). The Compensation Committee also reviews and approves
various other company compensation policies and matters, and administers the
company's stock option plans, including the review and approval of stock
option grants to the executive officers of the company.
General Compensation Philosophy
The company's general compensation philosophy is that total cash
compensation should vary with the performance of the company in attaining
financial and non-financial objectives and that any long-term incentive
compensation should be closely aligned with the interests of the stockholders.
The company has several performance-based compensation programs in which the
majority of Intel's employees are eligible to participate. Most company
employees not compensated on a commission basis participate in the Employee
Bonus Program (the "EBP"). For the executive officers, participation in the
EOBP is in lieu of participation in the EBP.
Total cash compensation for the majority of Intel's employees, including
its executive officers, consists of the following components:
. Base salary;
. A cash bonus (either through the EBP or the EOBP) that is related to
earnings per share of the company and is based on an individual bonus
target for the performance period (see "Executive Officer Bonus Plan"
for a discussion of the bonus plan covering executive officers); and
. A cash bonus that is proportional to corporate profitability (see
"Employee Cash Bonus Plan").
Long-term incentive compensation is realized through the granting of stock
options to most employees, including eligible executive officers. In addition,
the company has assumed incentive plans in connection with mergers and
acquisitions, including vested and unvested in-the-money stock option grants.
At the time of assumption, these grants and plans are converted to become
options on or grants of Intel common stock. No new grants are made under such
assumed plans, and no directors or executive officers of the company are
recipients of grants made pursuant to such plans.
In addition to encouraging stock ownership by granting stock options, the
company further encourages its employees to own company stock through a tax-
qualified employee stock purchase plan, which is generally available to all
employees. This plan allows participants to buy company stock at a discount to
the market price with up to 10% of their salary and bonuses (subject to
certain limits), therefore allowing employees to profit when the value of the
company's stock increases over time.
Setting Executive Compensation
In setting the base salary and individual bonus target amount (together
referred to as "BSBT") for executive officers, the Compensation Committee
reviews information relating to executive compensation of U.S.-based companies
that are considered generally comparable to the company (a substantial
majority of which companies are included in the Dow Jones Technology Index).
While there is no specific formula that is used to set pay in relation to this
market data, executive officer BSBT is generally set to be slightly below the
average salaries for comparable jobs in the marketplace. However, when the
company's business groups meet or exceed certain predetermined financial and
non-financial goals, amounts paid under the company's performance-based
compensation programs may lead to total cash compensation levels that are
higher than the average salaries for comparable jobs. The Compensation
Committee also reviews the compensation levels of the executive officers for
internal consistency relative to the 100 most highly paid employees of the
company.
11
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), places a limit of $1,000,000 on the amount of compensation that may
be deducted by the company in any year with respect to each of the company's
five most highly paid executive officers. Certain performance-based
compensation that has been approved by stockholders is not subject to the
deduction limit. The company's 1984 stock option plan and the EOBP are
qualified so that awards under such plans constitute performance-based
compensation not subject to Section 162(m) of the Code. To maintain
flexibility in compensating executive officers in a manner designed to promote
varying corporate goals, the Compensation Committee has not adopted a policy
that all compensation must be deductible.
Base Salary
The Compensation Committee reviews the history of and proposals for the
compensation package of each of the company's executive officers, including
BSBT and performance-based compensation components. The base salary is then
set as a percentage of BSBT, taking into account the level and amount of
responsibility of the individual. In general, executive officers having the
highest level and amount of responsibility have the lowest percentage of their
BSBT as base salary and the highest percentage of their BSBT as their
individual bonus target amount. For example, in 1999 the base salary for Dr.
Barrett, President and Chief Executive Officer, was 50% of his total BSBT. The
other executives' base salaries (other than Dr. Moore's) were determined in
the same manner, but the base salary segment as a percentage of their BSBT for
1999 ranged from 50% to 60%, depending on their job responsibilities. Once
fixed, base salary does not depend on the company's performance. In 1999, Dr.
Moore, the company's Chairman Emeritus, received compensation equal in amount
to that paid to outside directors (as described under "Directors'
Compensation").
As a result of this process, and in accordance with the company's
compensation philosophy that total cash compensation should vary with company
performance, the Compensation Committee establishes base salaries of the
company's executive officers at levels which the Compensation Committee
believes are below the average base salaries of executives of companies
considered by the Compensation Committee to be comparable to the company.
Thus, as set forth below, a large part of each executive officer's potential
total cash compensation is dependent on the performance of the company as
measured through its performance-based compensation programs.
Performance-Based Compensation
Executive Officer Bonus Plan
The EOBP is a cash-based incentive bonus program. The purpose of the EOBP
is to motivate and reward eligible employees for good performance by making a
portion of their cash compensation dependent on diluted earnings per share
("EPS") of the company.
The EOBP provides for the determination of a maximum bonus amount which is
established annually for each executive officer pursuant to a predetermined
objective formula, subject to a maximum annual limit of $5,000,000. Under this
predetermined formula, the maximum bonus payment for any performance period is
the product of (i) the executive officer's individual bonus target for the
performance period and (ii) the numerical value of the company's EPS for the
performance period multiplied by a pre-established factor (the "multiplier")
set by the Compensation Committee. For purposes of this formula, "EPS" means
the greater of (x) the company's operating income or (y) the company's net
income, in each case per weighted average common share outstanding, assuming
dilution during such performance period. Operating income does not include
interest and other income earned by the company, and does not include a
deduction for interest expense and income taxes; as a result, the figure for
operating income per share generally exceeds the figure for net income per
share. The EPS data to be utilized in the calculations (and which is also used
in the company's published financial statements) is reviewed and approved by
the Compensation Committee.
In January 1999, the Compensation Committee established individual bonus
targets ranging from $125,000 to $525,000 for each of the executive officers
except Dr. Moore (representing a range of 40% to 50% of BSBT)
12
and set the multiplier as 0.91 for the 1999 performance period (subsequently
adjusted to 1.82 in connection with the 1999 stock split). During this period,
operating income per share of $2.81 exceeded net income per share of $2.11 and
led to an EPS value, as defined, of $2.81 to be used in the formula for
determining the maximum bonus amount.
Under the EOBP, the Compensation Committee has discretion to reduce (but
not to increase) an individual's actual bonus payment from the amount that
would otherwise be payable under the above formula. In the past, the
Compensation Committee has exercised its discretion to pay bonuses at amounts
that were below the maximum amounts permitted under the EOBP. The EOBP does
not specify the factors that the Compensation Committee evaluates in the
exercise of its discretion to reduce bonus payments under the EOBP and does
not require the Compensation Committee to make such a reduction.
For the 1999 performance period, the Compensation Committee chose to
exercise its discretion to reduce the bonus amounts paid under the EOBP to the
amounts that would have been paid to the executive officers under the EBP.
Bonus payments under the EBP are generally lower than the maximum bonuses
payable under the EOBP because of differences in the plan calculations of
bonus amounts. The EBP formula utilizes the net income per share amount in its
calculation, and that per share amount may be adjusted in the discretion of
the Compensation Committee. For 1999, the net income per share amount was
adjusted for certain acquisition-related costs. The EPS utilized in the EOBP
formula is based on the greater of operating income or net income. The EBP
formula also takes into account whether certain business group objectives have
been met over the performance period. For example, for 1999, business group
objectives considered in determining the bonus payments under the EBP included
financial and non-financial goals such as sales, customer satisfaction,
productivity measures, cost reduction and employee training. The particular
goals are set each year and vary from year to year. In determining bonuses
payable to the executive officers with responsibility for overall performance
of the company, such as the Chairman of the Board and the Chief Executive
Officer, the Compensation Committee took into account the corporate average
score on achievement of business objectives. For those executive officers with
specific responsibility for a particular business group, achievement scores
were based on either the individual business group's score or a combination of
the group's score and the corporate average score.
Employee Cash Bonus Plan
The Employee Cash Bonus Plan (the "ECBP") is a profit-sharing program that
offers cash rewards to employees, including executive officers, based on
corporate profitability. Twice a year, eligible employees receive 0.55 day's
pay (calculated based on eligible earnings for the six-month period, including
one-half of EBP or EOBP bonus targets as applicable) for every two percentage
points of corporate pretax profit as a percentage of revenues, or a total
payment based on 4% of net income, whichever is greater. The Employee Cash
Bonus is paid in the first and third quarters of each year based on corporate
performance for the preceding two quarters.
For the year 1999, payments based on 4% of net income resulted in an annual
cash bonus payment under the ECBP of 26.4 days' pay per employee.
Profit-Sharing Retirement Plans
The company has both tax-qualified and non-qualified capital
accumulation/retirement plans ("Profit-Sharing Retirement Plans"). The tax-
qualified plans are available to eligible employees in the U.S. and Puerto
Rico, and there are similar plans for certain of the company's non-U.S.
subsidiaries. The non-qualified plan is a supplemental plan that provides to
eligible employees in the U.S. those contributions that could not be
contributed to their accounts under the qualified plan because of limitations
under the Code. The Profit-Sharing Retirement Plans are defined contribution
plans that are designed to accumulate retirement funds for employees,
including the executive officers, and to allow the company to make
contributions or allocations to those funds. The company contribution is
totally discretionary. The contributions approved by the Board may vary with
the financial performance of the company, particularly the revenues and income
of the company. However, there are
13
no corporate performance factors or other specific factors that are required
to be considered by the Board in determining the contribution. Contributions
made by the company under the plans vest based on years of service. Vesting
begins after three years of service in 20% annual increments until the
employee is 100% vested after seven years.
For 1999, the discretionary company contributions (including allocation of
forfeitures) to the Profit-Sharing Retirement Plans for all eligible
employees, including executive officers, equaled 12.5% of eligible salary
(which includes actual EBP or EOBP bonus payments as applicable).
Contributions to the qualified plan are limited under the Code. Where Code
limits applied, the excess, up to 12.5% of eligible salary, was allocated to
the non-qualified plan for eligible employees, including executive officers.
Stock Options
Stock options are granted by the company to aid in the retention of
employees and to align the interests of employees with those of the
stockholders. Stock options have value for an employee only if the price of
the company's stock increases above the fair market value on the grant date
and the employee remains in the company's employ for the period required for
the stock option to be exercisable, thus providing an incentive to remain in
the company's employ. In addition, stock options directly link a portion of an
employee's compensation to the interests of stockholders by providing an
incentive to maximize stockholder value.
The company has a 1984 Stock Option Plan, as amended, for use with officers
and directors. The 1984 Stock Option Plan is generally used for making annual
grants to officers and directors as a part of the company's executive
performance review process. Annual stock option grants for executives are a
key element of market-competitive total compensation. In 1999, stock options
for the executive officers were granted upon recommendation of management and
approval of the Compensation Committee. Individual grant amounts were based on
internal factors, such as the size of prior grants, relative job scope and
contributions made during the past year, as well as a review of publicly
available data on senior management compensation at other companies. In
general, initial grants received upon commencement of employment are
exercisable in increments over a five-year period, and subsequent grants are
first exercisable five years after the date of grant (e.g., options granted in
1999 become exercisable in 2004). Under this 1984 Stock Option Plan, the
company occasionally makes additional stock option grants to key officers and
other senior-level employees in recognition of their future potential in
leading the corporation. The vesting schedule for these grants is generally
longer than that of regular stock options, typically vesting in increments
beginning five years after the grant date, with the final increment vesting
eight years after the grant date. The company also has a 1997 Stock Option
Plan for use with all employees other than officers and directors. Stock
options under all such plans are granted at a price equal to the fair market
value on the date of grant. In addition, the company has assumed incentive
plans in connection with mergers and acquisitions, including vested and
unvested in-the-money stock option grants. At the time of assumption, these
grants and plans are converted to become options on or grants of Intel common
stock. No new grants are made under such assumed plans, and no directors or
executive officers of the company are recipients of grants made pursuant to
such plans.
Company Performance and CEO Compensation
The company's compensation program is designed to support the achievement
of corporate and business objectives. This pay-for-performance program is most
clearly exemplified in the compensation of the company's Chief Executive
Officer, Dr. Barrett.
Dr. Barrett does not have an employment contract. Dr. Barrett's BSBT is
determined in the same manner as described above for all executive officers.
In setting compensation levels for the Chief Executive Officer, the
Compensation Committee considers data reflecting comparative compensation
information from other companies for the prior year. In line with the
Compensation Committee's general practice and discretionary authority,
however, Dr. Barrett's 1999 salary and individual bonus target were not tied
directly to the comparative compensation data. In January 1999, Dr. Barrett's
base salary and bonus target were set at levels which, by
14
comparison to selected companies reflected in the market data (a majority of
which companies are included in the Dow Jones Technology Index), were 51% of
the average for base salary, 50% of the average for target incentive-based
compensation and 50% of the average for BSBT.
Under the EOBP, Dr. Barrett's actual bonus for 1999 (paid in 2000) was
$2,472,750. This bonus, like the bonuses paid to each of the other executive
officers under the EOBP, was less than the maximum bonus provided under the
EOBP formula due to the Compensation Committee's exercise of its discretion to
reduce the maximum bonus to the bonus derived by utilizing the EBP formula, as
described above. Although Dr. Barrett's BSBT was 50% of the average total
target compensation disclosed by the selected peer group, due to the high
variability in the company's total compensation program and to the company's
strong 1999 financial performance, his actual cash compensation (i.e., base
salary and bonus) for 1999 was 91% of the average total actual cash
compensation disclosed by the selected peer group.
In 1999, the Compensation Committee awarded Dr. Barrett stock options to
purchase 108,000 shares of stock. These options first become exercisable in
2004. In 1999, the company also contributed $20,000 to Dr. Barrett's account
under the tax-qualified retirement plan and allocated $272,500 to Dr.
Barrett's account under the non-qualified retirement plan, based on the
company's 1999 results. In general, Dr. Barrett's retirement plan accounts are
available to Dr. Barrett only upon retirement, termination, disability or
death.
The Compensation Committee is pleased to submit this report to the
stockholders with regard to the above matters.
Compensation
Committee:
Jane E. Shaw, Chairman Winston H. Chen
John P. Browne David S. Pottruck
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Dr. Shaw and Messrs. Browne, Chen and Pottruck, all of whom are outside
directors, served on the Compensation Committee in 1999. No director or
executive officer of Intel serves on the compensation committee of the board
of directors of any company for which Dr. Shaw or Messrs. Browne, Chen and
Pottruck serve as executive officers or directors.
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL ARRANGEMENTS
None of the company's executive officers has employment or severance
arrangements with the company.
15
EXECUTIVE COMPENSATION
The following tables set forth the annual compensation for the company's
Chief Executive Officer during 1999, and for the four most highly compensated
executive officers of the company, other than the Chief Executive Officer,
serving as executive officers at the end of 1999.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards (3)
------------------------------------ ------------
Securities
Other Annual Underlying All Other
Name and Principal Compensation Options Compensation
Position Year Salary ($) Bonus ($)(1) ($)(2) (#)(4) ($)(5)
- ------------------ ---- ---------- ------------ ------------ ------------ ------------
Craig R. Barrett 1999 525,000 2,591,300 -- 108,000 292,500
President and 1998 454,200 1,789,800 35,500 744,000 328,700
Chief Executive
Officer 1997 365,000 2,190,100 38,400 120,000 295,000
Andrew S. Grove 1999 500,000 2,467,900 -- 108,000 305,700
Chairman of the Board 1998 490,000 1,926,800 -- 744,000 406,900
1997 465,000 2,790,400 -- 144,000 384,000
Gerhard H. Parker 1999 310,000 1,286,400 -- 54,000 163,900
Executive Vice
President 1998 290,000 989,700 -- 64,000 207,400
General Manager, 1997 275,000 1,382,300 -- 464,000 187,200
New Business Group
Leslie L. Vadasz 1999 260,000 1,120,000 -- 27,000 143,600
Executive Vice
President 1998 255,000 879,800 -- 36,000 173,800
President, Intel
Capital 1997 250,000 1,148,200 -- 36,000 166,600
Paul S. Otellini 1999 266,000 1,109,300 -- 54,000 136,100
Executive Vice
President 1998 243,800 812,200 -- 64,000 176,600
General Manager, Intel 1997 225,000 1,179,800 -- 464,000 161,100
Architecture Business
Group
- --------
(1) This amount includes the bonuses paid under the EOBP and the ECBP for
1997, 1998 and 1999.
(2) Reimbursement for apartment near corporate headquarters and related taxes.
(3) The company does not offer any restricted stock awards, stock appreciation
rights or other long-term incentive programs.
(4) Indicates number of shares of common stock underlying options.
(5) All amounts listed in this column are composed of discretionary company
contributions made under the company's non-qualified, defined contribution
retirement plan and discretionary company contributions of $20,000 for
each of the named executives in each of the years presented to the
company's qualified, broad-based defined contribution retirement plan.
These amounts are to be paid out to the named executives (or any other
plan participant) only upon retirement, termination, disability or death.
16
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
------------------------------------------------------- Potential Realizable Value
Number of Percent of at Assumed Annual Rates
Securities Total Options of Stock Price Appreciation
Underlying Granted to Exercise or for Option Term ($)(4)
Options Employees in Base Price Expiration ----------------------------
Name Granted (#)(1) Fiscal Year (2) ($/Share) (3) Date 5% 10%
- ---- -------------- --------------- ------------- ---------- ------------- --------------
C. Barrett 108,000 0.27% $61.41 4/13/09 4,171,000 10,570,100
A. Grove 108,000 0.27% $61.41 4/13/09 4,171,000 10,570,100
G. Parker 54,000 0.13% $61.41 4/13/09 2,085,500 5,285,100
L. Vadasz 27,000 0.07% $61.41 4/13/09 1,042,800 2,642,500
P. Otellini 54,000 0.13% $61.41 4/13/09 2,085,500 5,285,100
- --------
(1) These options are first exercisable in 2004.
(2) Based upon a total of 40,632,056 options granted to employees under
Intel's option plans in 1999.
(3) Under all stock option plans, the option purchase price is equal to the
fair market value at the date of the grant. All of these options were
granted on April 13, 1999.
(4) In accordance with Securities and Exchange Commission rules, these columns
show gains that might exist for the respective options, assuming that the
market price of Intel common stock appreciates from the date of grant over
a period of 10 years at the annualized rates of 5% and 10%, respectively.
If the stock price does not increase above the exercise price at the time
of exercise, realized value to the named executives from these options
will be zero.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of
Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
Value December 25, 1999 (#)(1) December 25, 1999 ($)(2)
Shares Acquired Realized ------------------------- -------------------------
Name on Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- ---------- ----------- ------------- ----------- -------------
C. Barrett -- -- 1,270,976 1,420,000 100,239,600 73,205,600
A. Grove -- -- 732,000 1,608,000 54,006,000 87,330,600
G. Parker 170,000 11,075,620 506,672 806,000 39,734,700 40,811,500
L. Vadasz -- -- 580,672 243,000 45,713,200 13,992,300
P. Otellini 200,662 12,904,546 888,250 806,000 67,693,400 40,811,500
- --------
(1) These amounts represent the total number of shares subject to stock
options held by the named executives at December 25, 1999. These options
were granted on various dates during the years 1990 through 1999.
(2) These amounts represent the difference between the exercise price of the
stock options and the closing price of Intel common stock on December 23,
1999 (the last day of trading for the fiscal year ended December 25,
1999), for all in-the-money options held by the named executive. The in-
the-money stock option exercise prices range from $2.44 to $61.41. These
stock options were granted at the fair market value of the stock on the
grant date.
17
PENSION PLAN TABLE
Years of Service (2)(3)
---------------------------------------
Eligible Compensation (1) 15 20 25 30 35
- ------------------------- ------- ------- ------- ------- -------
$160,000 and above..................... $30,382 $40,510 $50,638 $60,765 $70,893
- --------
(1) The plan provides for minimum pension benefits that are determined by a
participant's years of service credited under the plan, final average
compensation, taking into account the participant's Social Security wage
base and the value of the participant's company contributions, plus
earnings, in the Profit-Sharing Retirement Plan. If the annuity value of
the profit-sharing account balance exceeds the pension guarantee, the
participant will receive benefits from the Profit-Sharing Retirement Plan
only. Compensation includes regular earnings and most bonuses. However,
maximum eligible compensation for 1999 is $160,000, in accordance with
Internal Revenue Code Section 401(a)(17). This amount is subject to cost-
of-living adjustments in accordance with Internal Revenue Code Section
415(d).
(2) For each of the employees named in the Summary Compensation Table, the
years of credited service as of year-end 1999 under the company's pension
plan are currently as follows: Dr. Barrett (25); Dr. Grove (31); Dr.
Parker (30); Mr. Vadasz (31); and Mr. Otellini (25).
(3) The table illustrates the estimated annual benefits payable in the form of
a straight-life annuity upon retirement at age 65 under the pension plan
to persons in the specified compensation and years of service
classifications for Social Security benefits. The Employee Retirement
Income Security Act of 1974 contains certain limitations on the amount of
benefits that may be paid under pension plans qualified under the Internal
Revenue Code. The amounts shown are subject to reduction to the extent
that they exceed such limitations but are not subject to reduction for
Social Security benefits.
PROPOSAL 2: AMENDMENT OF THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 4.5 BILLION
TO 10 BILLION
Introduction
The company's Restated Certificate of Incorporation currently authorizes
the issuance of four billion five hundred million (4,500,000,000) shares of
common stock, with a par value of one tenth of one cent ($.001) per share, and
fifty million (50,000,000) shares of preferred stock, with a par value of one
tenth of one cent ($.001) per share. In January 2000, the Board of Directors
adopted a resolution proposing that the Restated Certificate of Incorporation
be amended to increase the authorized number of shares of common stock to ten
billion (10,000,000,000), subject to stockholder approval of the amendment.
Current Use of Shares
As of February 25, 2000, the company has approximately 3,342 million shares
of common stock outstanding and approximately 602 million shares reserved for
future issuance under the company's employee stock plans, of which
approximately 298 million shares are covered by outstanding options and
approximately 304 million shares are available for grant or purchase. In
addition, the company has approximately 4 million shares reserved for issuance
upon conversion of convertible notes assumed in the acquisition of Level One
Communications, Incorporated. Based upon the foregoing number of outstanding
and reserved shares of common stock, the company currently has approximately
552 million shares remaining available for other purposes.
Proposed Amendment to Restated Certificate of Incorporation
The Board of Directors has adopted resolutions setting forth (i) the
proposed amendment to the first sentence of paragraph 4 of the company's
Restated Certificate of Incorporation; (ii) the advisability of the amendment;
and (iii) a call for submission of the amendment for approval by the company's
stockholders at the annual meeting.
18
The following is the text of the first sentence of paragraph 4 of the
Restated Certificate of Incorporation of the company, as proposed to be
amended:
The total number of shares of all classes of stock that the Corporation is
authorized to issue is ten billion fifty million (10,050,000,000),
consisting of ten billion (10,000,000,000) shares of Common Stock with a
par value of one tenth of one cent ($.001) per share and fifty million
(50,000,000) shares of Preferred Stock with a par value of one tenth of one
cent ($.001) per share.
Purpose and Effect of the Proposed Amendment
The Board of Directors believes that the availability of additional
authorized but unissued shares will provide the company with the flexibility
to issue common stock for a variety of corporate purposes, such as to effect
future stock splits and stock dividends, to make acquisitions through the use
of stock, to raise equity capital, to adopt additional employee benefit plans
or to reserve additional shares for issuance under such plans and under plans
of acquired companies.
Increasing the number of shares of common stock that Intel is authorized to
issue would give the company additional flexibility to maintain a reasonable
stock price with future stock splits and stock dividends. On 12 occasions
since Intel's initial public offering in 1971, there has been either a stock
split or a stock dividend functionally serving as a stock split. The last such
action was a 2-for-1 stock split effected as a dividend in April 1999. Also in
1999, the company issued approximately 34.3 million shares of common stock to
acquire Level One Communications, Incorporated, which was the company's only
acquisition during the last 10 years using stock instead of cash as the
primary consideration. The Board of Directors believes that the proposed
increase in authorized common stock will make sufficient shares available for
use pursuant to the purposes described herein. Other than as permitted or
required under the company's employee benefit plans and under outstanding
options, warrants and other securities convertible into common stock, the
Board of Directors has no immediate plans, understanding, agreements or
commitments to issue additional common stock for any purposes. No additional
action or authorization by the company's stockholders would be necessary prior
to the issuance of such additional shares, unless required by applicable law
or the rules of any stock exchange or national securities association trading
system on which the common stock is then listed or quoted. The company
reserves the right to seek a further increase in authorized shares from time
to time in the future as considered appropriate by the Board of Directors.
Under the company's Restated Certificate of Incorporation, the company's
stockholders do not have preemptive rights with respect to common stock. Thus,
should the Board of Directors elect to issue additional shares of common
stock, existing stockholders would not have any preferential rights to
purchase such shares. In addition, if the Board of Directors elects to issue
additional shares of common stock, such issuance could have a dilutive effect
on the earnings per share, voting power and shareholdings of current
stockholders.
The proposed amendment to increase the authorized number of shares of
common stock could, under certain circumstances, have an anti-takeover effect,
although this is not the intention of this proposal. For example, in the event
of a hostile attempt to take over control of the company, it may be possible
for the company to endeavor to impede the attempt by issuing shares of common
stock, thereby diluting the voting power of the other outstanding shares and
increasing the potential cost to acquire control of the company. The amendment
therefore may have the effect of discouraging unsolicited takeover attempts,
thereby potentially limiting the opportunity for the company's stockholders to
dispose of their shares at the higher price generally available in takeover
attempts or that may be available under a merger proposal. The proposed
amendment may have the effect of permitting the company's current management,
including the current Board of Directors, to retain its position, and place it
in a better position to resist changes that stockholders may wish to make if
they are dissatisfied with the conduct of the company's business. However, the
Board of Directors is not aware of any attempt to take control of the company,
and the Board of Directors has not presented this proposal with the intent
that it be utilized as a type of anti-takeover device.
If the proposed amendment is adopted, it will become effective upon filing
of a Certificate of Amendment to the company's Restated Certificate of
Incorporation with the Delaware Secretary of State. However, if the
19
company's stockholders approve the proposed amendment to the company's Amended
and Restated Certificate of Incorporation, the Board retains discretion under
Delaware law not to implement the proposed amendment. If the Board exercised
such discretion, the number of authorized shares would remain at current
levels.
Vote Necessary to Approve the Amendment
The affirmative vote of the holders of a majority of the outstanding shares
of common stock entitled to vote at the annual meeting, assuming a quorum is
present, is necessary for approval of the amendment. Therefore, abstentions
and broker non-votes (which may occur if a beneficial owner of stock whose
shares are held in a brokerage or bank account fails to provide the broker or
the bank with voting instructions as to such shares) effectively count as
votes against the amendment.
Recommendation of the Board
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO AMEND THE
COMPANY'S RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK FROM FOUR BILLION FIVE HUNDRED MILLION
(4,500,000,000) TO TEN BILLION (10,000,000,000). UNLESS A CONTRARY CHOICE IS
SPECIFIED, PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR
APPROVAL OF THE AMENDMENT.
PROPOSAL 3: APPROVAL OF AMENDMENT AND EXTENSION OF THE COMPANY'S EXECUTIVE
OFFICER BONUS PLAN
Introduction
Since 1994, the company has had an Executive Officer Bonus Plan ("EOBP").
The EOBP is a cash-based incentive bonus program, and its purpose is to
motivate and reward eligible employees for good performance by making a
portion of their cash compensation dependent on diluted earnings per share
("EPS") of the company. There are currently 11 persons, the company's
executive officers (except for Dr. Moore), who are eligible to receive bonuses
under the EOBP. These executive officers include Craig Barrett, the company's
President and Chief Executive Officer, and the other officers listed in the
section of this proxy statement entitled "Executive Compensation."
The EOBP was last submitted to the stockholders for approval in 1995. In
accordance with this Proposal 3, the company is requesting that the
stockholders approve an amendment to the EOBP concerning the relevant
calculation of EPS under the EOBP, and extend qualification of the EOBP under
Section 162(m), as further described herein, for an additional five years,
from 2000 through 2004.
The company is seeking stockholder approval for this amendment and
extension of the EOBP because of the effect of Section 162(m) of the Internal
Revenue Code. Section 162(m) of the Code places a limit of $1,000,000 on the
amount of compensation that may be deducted by the company in any tax year
with respect to each of the company's five most highly paid executives.
However, certain performance-based compensation approved by stockholders is
not subject to the deduction limit. The EOBP is designed to provide for this
type of performance-based compensation. To continue to qualify under Section
162(m), the company must obtain stockholder approval of the EOBP at least
every five years.
The text of the EOBP is set forth in Exhibit A to this proxy statement, and
the proposed new language which is the subject of this proposal is underlined.
The following is intended to be a summary of the EOBP's principal terms and
does not purport to be a complete statement of its terms. This summary is
subject to and qualified in its entirety by reference to Exhibit A.
Purpose of the EOBP
The purpose of the EOBP is to (i) motivate and reward executives for good
performance and (ii) allow the company's compensation expense to vary with the
company's profitability. The company's compensation policy
20
is that cash compensation should vary with company performance. In accordance
with that policy, the Compensation Committee establishes base salaries for the
company's executives at levels that are generally below the base salaries of
executives of companies generally considered by the Compensation Committee to
be comparable to Intel. Thus, a large part of each executive's total cash
compensation is tied to performance of the company by way of performance-based
plans such as the EOBP. The EOBP provides for the determination of a maximum
bonus amount that is established annually for each executive officer pursuant
to a predetermined objective formula, subject to a maximum annual limit of
$5,000,000. Under this predetermined formula, the maximum bonus payment for
any performance period is the product of (i) the executive officer's
individual bonus target for the performance period and (ii) the numerical
value of the company's EPS for the performance period multiplied by a pre-
established factor (the "multiplier") set by the Compensation Committee. The
company's use of the EOBP is described in this proxy statement in the "Report
of the Compensation Committee on Executive Compensation."
Participants
As noted herein, the individuals eligible for the EOBP are the company's
executive officers, currently 11 persons (excluding Dr. Moore).
The Use of Earnings Per Share (EPS) in the EOBP
For purposes of the EOBP bonus calculation formula, "EPS" means the greater
of (x) the company's operating income or (y) the company's net income, in each
case per weighted average common share outstanding, assuming dilution during
such performance period. Operating income does not include interest and other
income earned by the company, and does not include a deduction for interest
expense and income taxes; as a result, the figure for operating income per
share generally exceeds the figure for net income per share. The EPS data
utilized in the calculations (and which is also used in the company's
published financial statements) is reviewed by the Compensation Committee, and
the maximum and actual bonuses are approved by the Compensation Committee.
Under the EOBP, the Compensation Committee has discretion to reduce (but
not to increase) an individual's actual bonus payment from the amount that
would otherwise be payable under the EOBP formula. In the past, the
Compensation Committee has exercised its discretion to pay bonuses at amounts
that were below the maximum amounts permitted under the EOBP. The EOBP does
not specify the factors that the Compensation Committee evaluates in the
exercise of its discretion to reduce bonus payments under the EOBP and does
not require the Compensation Committee to make such a reduction. For each of
the last five years, the Compensation Committee has chosen to exercise its
discretion to reduce the bonus amounts paid under the EOBP to the amounts that
would have been paid to the executive officers under the company's Employee
Bonus Plan ("EBP"). Executive officers covered by the EOBP do not receive a
bonus under the EBP. Bonus payments under the EBP are generally lower than the
maximum bonuses payable under the EOBP because of differences in the plan
calculations of bonus amounts. The EBP formula utilizes the net income per
share amount in its calculation, and that per share amount may be adjusted in
the discretion of the Compensation Committee. For 1999, the EBP net income per
share amount was adjusted for certain acquisition-related costs. The EBP
formula also takes into account whether certain business group objectives have
been met over the performance period. For example, for 1999, business group
objectives considered in determining the bonus payments under the EBP included
financial and non-financial goals such as sales, customer satisfaction,
productivity measures, cost reduction and employee training. The particular
goals are set each year and vary from year to year. In determining bonuses
payable to the executive officers with responsibility for overall performance
of the company, such as the Chairman of the Board and the Chief Executive
Officer, the Compensation Committee took into account the corporate average
score on achievement of business objectives. For those executive officers with
specific responsibility for a particular business group, achievement scores
were based on either the individual business group's score or a combination of
the group's score and the corporate average score.
21
Proposed Amendment to the EOBP
As with the EBP and certain other company compensation programs, management
and the Board believe it would be useful to allow the Compensation Committee
to have the discretion to adjust the calculation of EPS for the purposes of
the EOBP. Under the EOBP as proposed to be amended, "EPS" means the greater of
(x) the company's operating income or (y) the company's net income per
weighted average common and common equivalent shares outstanding, in each case
adjustable based upon qualifying objective criteria selected by the Committee
in its sole discretion within the period prescribed by the IRS. Such criteria
may include, but are not limited to: asset write-downs; acquisition-related
charges; litigation, claim judgments, settlements or tax settlements; the
effects of changes in tax law, changes in accounting principles or other such
laws or provisions affecting reported results; accruals for reorganization and
restructuring programs; unrealized gains or losses on investments; and any
extraordinary non-recurring items as described in Accounting Principles Board
Opinion No. 30 and/or in management's discussion and analysis of financial
conditions and results of operations appearing in the company's annual report
to stockholders for the applicable year. Subject to this requested stockholder
approval, the Compensation Committee has adopted the use of these criteria for
adjustment of the EPS calculation with regard to bonuses for 2000 under the
EOBP, which would be payable in 2001.
The actual amount of future bonus payments under the EOBP is not presently
determinable, and the discretion granted the Compensation Committee by this
amendment could result in the EPS figure in any year being higher or lower
than it might otherwise be without this grant of discretionary authority.
However, the EOBP continues to provide that no bonus in excess of $5,000,000
will be paid under the EOBP to any executive officer for any performance
period. Further, the Compensation Committee, in its sole discretion, may, as
it has in each of the past five years, reduce the amount of an executive's
bonus under the EOBP to an amount below the maximum bonus calculated pursuant
to the EOBP formula.
Vote Necessary to Approve the EOBP
The affirmative vote of the holders of a majority of the shares of Intel
common stock represented and voting at the annual meeting is required to
approve the amended and extended EOBP. Unless marked to the contrary, proxies
received will be voted FOR approval of the amended and extended EOBP.
In the event that stockholder approval of the amended and extended EOBP is
not received, the maximum amount payable under the EOBP for 2000 will be based
on the plan as in effect prior to the amendment and extension, and in
subsequent years, management and the Compensation Committee of the Board will
review various alternatives for introduction and use of other cash-based,
performance-linked bonus programs for the company's executive officers. To
maintain flexibility in compensating executive officers in a manner designed
to promote varying corporate goals, the Compensation Committee has not adopted
a policy that all compensation must be deductible under Section 162(m) of the
Code. If the amended EOBP is not approved by stockholders, and the company
makes payments under the existing EOBP, such payments will be deductible by
the company only to the extent permitted under Section 162(m) of the Code. In
addition, substantial portions of future payments made under a substitute plan
not approved by stockholders may be non-deductible to the company, increasing
the company's overall costs.
Recommendation of the Board
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
AMEND AND EXTEND THE COMPANY'S EXECUTIVE OFFICER BONUS PLAN. UNLESS A CONTRARY
CHOICE IS SPECIFIED, PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED
FOR THE PROPOSAL TO AMEND AND EXTEND THE COMPANY'S EXECUTIVE OFFICER BONUS
PLAN.
22
PROPOSAL 4: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Ernst & Young LLP have been the company's independent auditors since its
incorporation in 1968 and at the recommendation of the Audit Committee of the
Board have been selected by the Board of Directors as the company's
independent auditors for the fiscal year ending December 30, 2000. In the
event that ratification of this selection of auditors is not approved by a
majority of the shares of common stock voting thereon, management will review
its future selection of auditors.
A representative of Ernst & Young LLP is expected to be present at the
annual meeting and will have an opportunity to make a statement if he or she
so desires. The representative will also be available to respond to
appropriate questions from the stockholders.
Audit services of Ernst & Young LLP for 1999 included the examination of
the consolidated financial statements of the company and services related to
filings made with the Securities and Exchange Commission, as well as certain
services relating to the consolidated quarterly reports and annual and other
periodic reports at international locations.
Representatives of Ernst & Young LLP normally attend each meeting of the
Audit Committee of the Board. The Audit Committee on an annual basis reviews
audit and non-audit services performed by Ernst & Young LLP for the preceding
year as well as the fees charged by Ernst & Young LLP for such services. Non-
audit services are approved by the Audit Committee, which considers, among
other things, the possible effect of the performance of such services on the
auditors' independence.
Recommendation of the Board
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE APPOINTMENT
OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR THE COMPANY FOR THE CURRENT
YEAR. UNLESS A CONTRARY CHOICE IS SPECIFIED, PROXIES SOLICITED BY THE BOARD OF
DIRECTORS WILL BE VOTED FOR RATIFICATION OF THE APPOINTMENT.
OTHER MATTERS
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of
the Securities Exchange Act of 1934, as amended, requires the company's
directors and executive officers, among others, to file with the Securities
and Exchange Commission (the "SEC") and The Nasdaq Stock Market, Inc. an
initial report of ownership of the company's stock on Form 3 and reports of
changes in ownership on a Form 4 or a Form 5. Persons subject to Section 16
are required by SEC regulations to furnish the company with copies of all
Section 16(a) forms that they file. Under SEC rules, certain forms of indirect
ownership and ownership of company stock by certain family members is covered
by these reporting rules. As a matter of practice, the company's
administrative staff assists the company's executive officers and directors in
preparing initial reports of ownership and reports of changes in ownership and
in filing these reports on their behalf.
Based solely on a review of the copies of such forms furnished to the
company, and on written representations from certain reporting persons, the
company believes that during fiscal 1999, all of its executive officers and
directors filed required reports on a timely basis under Section 16(a), except
as follows: a Form 4 and Form 5 were not timely filed to report the sale of
shares obtained upon exercise of a stock option by Albert Yu, the company's
Senior Vice President, Microprocessor Products Group; a Form 4 was not timely
filed to report a private disposition of shares by Mr. Palevsky; and the
ownership of step-up warrants by a member of the family of Arvind Sodhani, the
company's Vice President and Treasurer, as to which Mr. Sodhani was deemed to
have beneficial ownership, was not reported on his Form 3, and the conversion
of those warrants into Intel stock was not timely reported on a Form 4 or a
Form 5. Amended or corrective filings, as applicable, have been made for each
of the above-described transactions.
23
2001 Stockholder Proposals or Nominations. From time to time, stockholders
of the company submit proposals that they believe should be voted upon at the
annual meeting or nominate persons for election to the Board of Directors.
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, some
stockholder proposals may be eligible for inclusion in the company's 2001
proxy statement. Any such stockholder proposals must be submitted in writing
to the Secretary of the company no later than December 13, 2000. Stockholders
interested in submitting such a proposal are advised to contact knowledgeable
counsel with regard to the detailed requirements of applicable securities
laws. The submission of a stockholder proposal does not guarantee that it will
be included in the company's proxy statement.
Alternatively, under the company's Bylaws, a proposal or a nomination that
the stockholder does not seek to include in the company's proxy statement
pursuant to Rule 14a-8 may be submitted in writing to the Secretary of the
company for the 2001 annual meeting of stockholders not less than 45 days or
more than 120 days prior to the date on which the company first mails its
proxy materials for the 2000 annual meeting, unless the date of the 2001
annual meeting is advanced by more than 30 days or delayed (other than as a
result of adjournment) by more than 30 days from the anniversary of the 2000
annual meeting. For the company's 2001 annual meeting, this means that any
such proposal or nomination must be submitted no earlier than December 13,
2000 and no later than February 26, 2001. If the date of the 2001 annual
meeting is advanced by more than 30 days or delayed (other than as a result of
adjournment) by more than 30 days from the anniversary of the 2000 annual
meeting, the stockholder must submit any such proposal or nomination no later
than the close of business on the later of the 60th day prior to the 2001
annual meeting or the 10th day following the day on which public announcement
of the date of such meeting is first made. The stockholder's submission must
include certain specified information concerning the proposal or nominee, as
the case may be, and information as to the stockholder's ownership of common
stock of the company. Proposals or nominations not meeting these requirements
will not be entertained at the annual meeting. If the stockholder does not
also comply with the requirements of Rule 14a-4(c)(2) under the Securities
Exchange Act of 1934, the company may exercise discretionary voting authority
under proxies it solicits to vote in accordance with its best judgment on any
such proposal or nomination submitted by a stockholder. Stockholders should
contact the Secretary of the company in writing at M/S SC4-203, 2200 Mission
College Blvd., Santa Clara, California 95052-8119 to make any submission or to
obtain additional information as to the proper form and content of
submissions.
Financial Statements. The company's financial statements for the year ended
December 25, 1999 are included in the company's 1999 Annual Report to
Stockholders. Copies of the annual report are being sent to the company's
stockholders concurrently with the mailing of this proxy statement.
Stockholders directly registered by name on the books of Harris Trust and
Savings Bank, or holding shares in nominee name through certain brokers and
banks, have in earlier mailings been offered the opportunity to obtain this
proxy statement and the annual report by accessing it in electronic form on
the company's Web site instead of receiving paper copies. If you have not
received or had access to the annual report, please notify the Secretary of
the company, M/S SC4-203, 2200 Mission College Blvd., Santa Clara, California
95052-8119, and a copy will be sent to you. The company's annual report and
this proxy statement are available on Intel's Investor Relations Web site
(www.intc.com).
Other Matters. At the date hereof, there are no other matters that the
Board of Directors intends to present, or has reason to believe others will
present, at the annual meeting. If other matters come before the annual
meeting, the persons named in the accompanying form of proxy will vote in
accordance with their best judgment with respect to such matters.
Proxy Solicitation. The expense of solicitation of proxies will be borne by
the company. The company has retained D. F. King & Co., Inc. to solicit
proxies for a fee of $11,500 plus a reasonable amount to cover expenses.
Certain of the company's directors, officers and other employees, without
additional compensation, may also solicit proxies personally or by written
communication, telephone or other electronic means. The company is required to
request brokers and nominees who hold stock in their name to furnish the
company's proxy material to beneficial owners of the stock and will reimburse
such brokers and nominees for their reasonable out-of-pocket expenses in so
doing.
24
VOTING VIA THE INTERNET OR BY TELEPHONE
If you hold your shares directly If you hold your shares in an account
registered in your name with Harris Bank: with a broker or a bank that participates
in the ADP Investor Communication
Services program:
- --------------------------------------------------------------------------------------
To vote by phone (within the U.S. and To vote by phone: your voting form from
Canada only, toll-free): (888) 266-6795 your broker or bank will show the
telephone number to call.
To vote via the Internet: To vote via the Internet:
www.harrisbank.com/wproxy www.proxyvote.com
For Shares Directly Registered in the Name of the Stockholder. Stockholders
with shares registered directly with Harris Bank may vote those shares
telephonically by calling Harris Bank at (888) 266-6795 (within the U.S. and
Canada only, toll-free), or via the Internet at Harris Bank's voting Web site
(www.harrisbank.com/wproxy).
For Shares Registered in the Name of a Broker or a Bank. A number of
brokers and banks are participating in a program provided through ADP Investor
Communication Services that offers telephone and Internet voting options. This
program is different from the program provided by Harris Bank for shares
registered directly in the name of the stockholder. If your shares are held in
an account with a broker or a bank participating in the ADP Investor
Communication Services program, you may vote those shares telephonically by
calling the telephone number shown on the voting form received from your
broker or bank, or via the Internet at ADP Investor Communication Services'
voting Web site (www.proxyvote.com).
General Information for All Shares Voted Via the Internet or By Telephone.
Votes submitted via the Internet or by telephone must be received by 12:00
midnight Central Time on May 16, 2000. Submitting your proxy via the Internet
or by telephone will not affect your right to vote in person should you decide
to attend the annual meeting.
The telephone and Internet voting procedures are designed to authenticate
stockholders' identities, to allow stockholders to give their voting
instructions and to confirm that stockholders' instructions have been recorded
properly. Counsel has advised the company that the Internet voting procedures
that have been made available through Harris Bank are consistent with the
requirements of applicable law. Stockholders voting via the Internet should
understand that there may be costs associated with electronic access, such as
usage charges from Internet access providers and telephone companies, that
must be borne by the stockholder.
By Order of the Board of Directors
/s/ F. THOMAS DUNLAP, JR.
By: F. THOMAS DUNLAP, JR.
Secretary
Santa Clara, California
Dated: April 12, 2000
25
EXHIBIT A
INTEL CORPORATION EXECUTIVE OFFICER BONUS PLAN (AMENDED AND RESTATED EFFECTIVE
JANUARY 1, 2000)
New language added or described in Proposal 3 is underlined for the
convenience of the reader.
1. PURPOSE. The purpose of this amended and restated Bonus Plan is to
motivate and reward eligible employees for good performance by making a
portion of their cash compensation dependent on earnings per share ("EPS") of
Intel Corporation (the "Company"). The Bonus Plan is designed to ensure that
the annual bonus paid hereunder to executive officers of the Company is
deductible without limit under Section 162(m) of the Internal Revenue Code of
1986, as amended, and the regulations and interpretations promulgated
thereunder (the "Code"). This amended and restated Bonus Plan is subject to
stockholder approval.
2. COVERED INDIVIDUALS. The individuals entitled to bonus payments
hereunder shall be the executive officers of the Company, as determined by the
Compensation Committee (the "Committee").
3. THE COMMITTEE. The Committee shall consist of at least two outside
directors of the Company who satisfy the requirements of Code Section 162(m).
The Committee shall have the sole discretion and authority to administer and
interpret the Bonus Plan in accordance with Code Section 162(m).
4. AMOUNT OF BONUS. Bonus payments are made in cash. The maximum bonus
payment is the product of (i) an individual bonus target in dollars for the
performance period set by the Committee in writing and (ii) the numerical
value of EPS for the performance period multiplied by a factor (the
"multiplier") that is set by the Committee in its sole discretion and is in
writing. The term "performance period" shall mean the service period for which
the bonus is payable. For this calculation, the term "EPS" shall mean the
greater of operating income or net income per weighted average common and
common equivalent shares outstanding, for the performance period, in each case
adjustable based upon qualifying objective criteria selected by the Committee
in its sole discretion within the period prescribed by the IRS. Such criteria
may include, but are not limited to: asset write-downs; acquisition-related
charges; litigation, claim judgments, settlements or tax settlements; the
effects of changes in tax law, changes in accounting principles or other such
laws or provisions affecting reported results; accruals for reorganization and
restructuring programs; unrealized gains or losses on investments; and any
extraordinary non-recurring items as described in Accounting Principles Board
Opinion No. 30 and/or in management's discussion and analysis of financial
condition and results of operations appearing in the annual report to
stockholders for the applicable year. The individual bonus target, the
multiplier and the EPS definition shall be adopted by the Committee in its
sole discretion with respect to each performance period no later than the
latest time permitted by the Code. However, no bonus in excess of $5,000,000
will be paid to any executive officer for any performance period. In its sole
discretion, the Committee may also reduce, but may not increase, an
individual's bonus calculated under the preceding formula. In determining the
amount of any reduced bonus, the Committee reserves the right to apply
subjective, discretionary criteria to determine a revised bonus amount. The
bonus payable hereunder shall be paid in lieu of any bonus payable under the
Company's Employee Bonus Plan.
5. PAYMENT OF BONUS. The payment of a bonus for a given performance period
requires that the executive officer be on the Company's payroll as of the last
day of the performance period. The Committee may make exceptions to this
requirement in the case of retirement, death or disability, as determined by
the Committee in its sole discretion. No bonus shall be paid unless and until
the Committee makes a certification in writing as required by Code Section
162(m).
6. AMENDMENT AND TERMINATION. The Company reserves the right to amend or
terminate this Bonus Plan at any time with respect to future services of
covered individuals. Bonus Plan amendments will require stockholder approval
only to the extent required by applicable law.
26
COMMUNICATING WITH THE COMPANY
We have from time to time received calls from stockholders inquiring about
the available means of communication with the company. We thought that it
would be helpful to describe these arrangements, which are available for your
use.
. If you would like to receive information about Intel, you may use one of
the following methods:
1. To have information such as the company's latest quarterly earnings
release, Form 10-K, Form 10-Q or annual report mailed to you, please
call Intel's transfer agent, Harris Trust and Savings Bank, at (800)
298-0146 (within the U.S. and Canada) or (312) 360-5125 (outside the
U.S. and Canada, call collect).
2. To listen to a recording of our most recent quarterly earnings release
or to reach a Stockholder Services representative, please call (800)
298-0146 (within the U.S. and Canada) or (312) 360-5125 (outside the
U.S. and Canada, call collect).
3. To view Intel's home page on the Internet, visit Intel's main Web site
at www.intel.com. Intel's home page gives you access to product,
marketing and financial data; an online version of this proxy statement
and Intel's annual report to stockholders; and job listings. The direct
address of Intel's Investor Relations Web site is www.intc.com.
. If you would like to write to us, please send your correspondence to the
following address:
Intel Corporation
2200 Mission College Blvd.
Santa Clara, CA 95052-8119 USA
Attn: Investor Relations, RN5-24
As a stockholder, you will continue to receive the annual report and proxy
statement either by mail or via the Internet if you choose that option.
27
Directions to the Santa Clara Convention Center
5001 Great America Parkway, Santa Clara, California
[MAP APPEARS HERE]
The Santa Clara Convention Center is located at the corner of Great America
Parkway and Tasman Drive. There is parking in front of the building and a large
parking garage behind the Center. There is NO CHARGE for parking.
From San Francisco From San Jose/Monterey/Morgan Hill
Take 101 South to the Great America Take 101 North to the Great
Parkway exit. Go East onto Great America Parkway exit. Go East
America Parkway (a left turn). onto Great America Parkway (a
Follow for 1 1/2 miles to Tasman right turn). Follow for 1 1/2
Drive. Turn right onto Tasman Drive, miles to Tasman Drive. Turn right
and the Center will be on your left. onto Tasman Drive, and the Center
will be on your left.
From Oakland
Take 880 South to 237 West. Turn From Sacramento/Walnut
left at the Great America Parkway Creek/Dublin
exit. Follow for about 3/4 mile. Take 680 South to Calaveras
Turn left onto Bunker Hill Drive Highway/237 West. See directions
(the Westin Hotel will be on your from Oakland (237 West).
left). This will bring you directly
into the parking garage for the
Center and hotel.
From Santa Cruz/Los Gatos
Take 880 North to 101 North. See
directions from San Jose.
INTEL CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ]
- ----------------------------------------------------------------------
The Board of Directors recommends a vote FOR Proposals 1, 2, 3 and 4.
- ----------------------------------------------------------------------
1. Election of director nominees listed below: For Withhold For All
01-C. Barrett 02-J. Browne 03-W. Chen All All Except
04-A. Grove 05-J. Guzy 06-G. Moore [_] [_] [_]
07-D. Pottruck 08-J. Shaw 09-L. Vadasz
10-D. Yoffie 11-C. Young
________________________________________________
Except Nominee(s) written above
2. Amendment of the Company's For Against Abstain
Restated Certificate of Incorporation to [_] [_] [_]
Increase the Number of Authorized
Shares of Common Stock from 4.5
Billion to 10 Billion.
3. Amendment and Extension of the [_] [_] [_]
Company's Executive Officer Bonus
Plan.
4. Ratification of Ernst & Young LLP as [_] [_] [_]
Independent Auditors.
I plan to attend the [_]
Annual Meeting in
person.
Date:___________________ Signature(s):__________________________________________
NOTE: Please sign exactly as name appears on this proxy. Joint owners must
each sign. Attorneys, executors, administrators, trustees or guardians
signing in a representative capacity must give full title.
[_] Mark here for address change noted on reverse side.
- --------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\
CONTROL NUMBER [INTEL LOGO]
YOU CAN VOTE BY TELEPHONE OR INTERNET!
AVAILABLE 24 HOURS A DAY * 7 DAYS A WEEK
Instead of mailing your proxy, you may choose one of the two voting methods
outlined below to vote your proxy. Have this proxy card in hand when you call.
TO VOTE BY PHONE
----------------
(within the U.S. and Canada only)
. Call toll free 1-888-266-6795 from a touch tone telephone. There is NO
CHARGE for this call.
. Enter the six-digit Control Number located above and then follow the voting
instructions.
Option 1: If you choose to vote as the Board of Directors recommends on ALL
--------
proposals, press 1. When asked, please confirm your vote by
pressing 1 again.
Option 2: If you choose to vote on EACH proposal SEPARATELY, press 0 and
--------
follow the recorded instructions. Your vote selections will be
repeated and you will have an opportunity to confirm them.
TO VOTE ON THE INTERNET
-----------------------
. Go to the following Web site: www.harrisbank.com/wproxy
. Enter the information requested on your computer screen, including your
six-digit Control Number located above, then follow the voting instructions
on the screen.
If you vote by telephone or the Internet, DO NOT mail back this proxy card.
Proxies submitted by telephone or the Internet must be received by 12:00
midnight, Central Time, on May 16, 2000.
THANK YOU FOR VOTING!
5157--Intel Corporation
PROXY PROXY
INTEL CORPORATION
2200 Mission College Blvd., Santa Clara, California 95052-8119
Proxy Solicited by Board of Directors for Annual Meeting--May 17, 2000
ANDREW S. GROVE, CRAIG R. BARRETT and F. THOMAS DUNLAP, JR., or any of them,
each with the power of substitution, are hereby authorized to represent and vote
the shares of the undersigned, with all the powers which the undersigned would
possess if personally present, at the Annual Meeting of Stockholders of Intel
Corporation to be held on Wednesday, May 17, 2000 or at any postponement or
adjournment thereof.
Shares represented by this proxy will be voted as directed by the stockholder.
If no such directions are indicated, the proxies will have authority to vote FOR
Item 1 (Election of Directors), FOR Item 2 (Amendment of the Company's Restated
Certificate of Incorporation to Increase the Number of Shares of Common Stock
from 4.5 Billion to 10 Billion), FOR Item 3 (Amendment and Extension of the
Company's Executive Officer Bonus Plan) and FOR Item 4 (Ratification of
Selection of Independent Auditors).
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting.
[_] Mark here for address change and note below.
New Address: __________________________________
_______________________________________________
_______________________________________________
IF VOTING BY PAPER,
PLEASE MARK, SIGN, DATE AND MAIL
THIS PROXY CARD PROMPTLY, USING
THE ENCLOSED ENVELOPE
(Continued and to be signed on reverse side.)
SEE REVERSE SIDE
- --------------------------------------------------------------------------------
Annual Meeting of Stockholders
Intel Corporation
May 17, 2000 -- 10:00 a.m. (Pacific Time)
[MAP TO SANTA CLARA CONVENTION CENTER]
Santa Clara Convention Center
5001 Great America Parkway
Santa Clara, California
5157--Intel Corporation