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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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intel. 2021 Proxy Statement Notice of Annual Stockholders’ Meeting


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 Letter From Your Chairman

      
      

 

Dear Stockholder,    LOGO     

 

2020 marked my first year serving as your independent Board Chairman and it has been my honor to work with the Board, senior management, and the broader Intel community in this role. Over the past year, our strategic evolution has continued unabated despite economic and social headwinds. Our sense of purpose, our core values and the fundamental principles of our operations that have guided Intel since its founding have remained constant. Key among those are our commitment to our employees and stockholders, as well as our understanding that we have a crucial role to play as a leader on environmental, social, and governance issues. That leadership not only makes us a stronger company, it also enables us to create value for the broader communities in which we operate.

During 2020, we achieved significant progress in furtherance of our transformation from a CPU to a multi-architecture XPU company. In light of the economic and social challenges that arose in 2020, we have doubled down on our commitment to cultivating leadership and fostering a culture that reflect and support this transformation. Our strategic evolution has driven change throughout the company.

Our CEO Leadership Transition

On January 13, 2021, our Board named Patrick Gelsinger to be Chief Executive Officer, effective as of February 15, 2021. After careful consideration, our Board concluded that the time was right to make this leadership change in order to draw upon Pat’s more than 40 years of technology and leadership experience. Most recently, Pat served as the Chief Executive Officer of VMware, Inc., where he significantly transformed the company into a recognized global leader in cloud infrastructure, enterprise mobility, and cyber security, almost tripling the company’s annual revenues. Pat’s appointment as Chief Executive Officer is a homecoming of sorts, as Pat began his career at Intel and spent 30 years here developing a deep knowledge of Intel and contributed in a fundamental way to its technology evolution as well as the development of its culture. Our Board is confident that Pat, together with the rest of the leadership team, will deliver strong execution of Intel’s

 

 

“We greatly value year-round communication and collaboration with our stockholders to discuss how our company’s strategic transformation is enabling us to play a larger role in our customers’ success and to apply technology to society’s greatest challenges.”

 

—Omar Ishrak

Independent Chairman

 

strategy to build on its product leadership and take advantage of the significant opportunities ahead. On behalf of the Board, I express my deep appreciation to Bob Swan, Pat’s predecessor as Intel CEO, for his leadership and significant contributions through this period of transformation for our company. Bob leaves Intel in a strong strategic and financial position, and the Board and I thank him for his tremendous contributions and a seamless leadership transition.

Rising to the Challenge of COVID-19

Over the past year, the COVID-19 pandemic has changed the lives of our employees, our customers, and our community. Our Board is deeply proud of how the Intel team rose to the challenge of COVID-19 and demonstrated the unrivaled value of our worldwide manufacturing network to support our customers and partners around the world. In response to the onset of COVID-19, we made operational changes and adopted measures to enable a continued safe environment for our employees and operation of our manufacturing sites. To aid and support employees during COVID-19, Intel is investing more than $100 million in additional benefits, including special recognition for employees working on site. We also put in place a telecommuting reimbursement program to help employees required to work from home improve their workspaces, and increased flexibility in our leave programs to support employees caring for children and others. Additionally, we launched our Pandemic Response Technology Initiative, which supported essential workers, hard-hit businesses, and students of all ages with Intel-funded technology projects led by employees in collaboration with our global customers and partners. Amid the effects of COVID-19, Intel achieved record revenue for the fifth consecutive year and maintained a strong balance sheet and liquidity position. From safeguarding wellness through healthcare and telehealth, to remote learning for students of all ages, to innovative technology solutions to help businesses safely reopen, the experiences of the past year have provided valuable lessons about the critical role Intel’s technologies can play, and have played, across society in response to public health and economic crises. Most importantly, as a company, we have learned to operate with more empathy, agility, and velocity.

Diversity and Inclusion are Driving Forces in Our Innovation

Intel strives to provide an environment where employees from diverse backgrounds are valued, respected, inspired, acknowledged, and rewarded so they can achieve their potential and fulfill their career aspirations. During the past year, the Intel community has had to confront senseless acts

 

 

     

 

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 Letter From Your Chairman Continued

      
      

 

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of racism and violence, specifically against African Americans. In response to and in keeping with Intel’s commitment to diversity and inclusion, senior management and our Board have publicly affirmed that inaction is not an option for Intel. Our commitment to combating racism and fostering a diverse and inclusive culture is a business imperative and key to our long-term success, making Intel, and each of our employees, stronger. For many years, we have taken actions to deeply integrate diversity and inclusion expectations into our culture, performance management systems, leadership expectations, and annual bonus metrics. We continued to raise the bar for ourselves in 2020 through the announcement of new 2030 goals and initiatives to drive change across the industry, including working with a coalition of companies on the creation of a new Global Inclusion Index. We also pledged $1 million in support of efforts to address social injustice and anti-racism across various nonprofit and community organizations and expanded our work and programs around social equity with the creation of a new Social Equity Program Office and the publication of Global Social Equity Policy Principles.

Continued Refreshment of Board Perspectives

Our Board is committed to fostering a diversity of backgrounds and perspectives so that our Board positions our company for the future. Since the beginning of 2016, we have welcomed eight new independent directors to the Board, three of which were women, and each of whom brings extensive experience and fresh perspectives to enrich Board dialogue and enhance the Board’s ability to continue effectively overseeing the business. Most recently, the Board welcomed Dion J. Weisler, the former President and Chief Executive Officer of HP, Inc. We are confident that Mr. Weisler’s extensive senior leadership, cybersecurity, and industry experience will complement and enhance the skills and expertise of our other Board members.

Empowering Our Workforce for Success

Intel could not have achieved the successes of the past year without the resilience and dedication of our employees. Because of the highly technical nature of our business, our success depends on our ability to attract and retain talented

and skilled employees to create the technology of the future. In order to attract, retain, and grow talented and engaged employees who can deliver their best work every day, we invest significant resources to making Intel a rewarding place to work, creating a company which our employees are proud to be a part of, and fostering an environment where we promote diversity and inclusion.

For over a decade, we have tracked and publicly reported on key human capital metrics, including workforce demographics, diversity and inclusion data, and turnover data. These initiatives and tracking data are regularly shared with the Board. In 2018, we met our goal to achieve full representation of women and underrepresented minorities in our U.S. workforce, two years ahead of schedule. We advanced transparency in our pay and representation data by publicly releasing our EEO-1 survey pay data in 2019. And, although the U.S. Equal Employment Opportunity Commission decided it would not continue to require the reporting of pay information, we felt it was important to continue collecting the data and to disclose it publicly in 2020. While we are proud of the progress we have made, we are keenly aware there is still more that we can do to cultivate and empower our talented workforce. With approximately 90% of our employees working in technical roles, our success depends on them understanding how their work contributes to the company’s overall strategy. We use a variety of channels to facilitate open and direct communication, including open forums with executives; employee experience surveys; and engagement through more than 30 employee resource groups, including the Women at Intel Network, the Network of Intel African American Employees, the Intel Latino Network, and many others.

Proactively Engaging with Stockholders

Intel remains committed to year-round and meaningful engagement with our stockholders. Our integrated stockholder outreach team, consisting of our Investor Relations group, Corporate Responsibility office, Human Resources office, and Corporate Secretary office, meets with a broad base of investors throughout the year to discuss executive compensation, corporate governance, corporate responsibility practices, and other matters of importance. Our team then reports to the Board on investor feedback and

 

 

     

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 Letter From Your Chairman Continued

      
      

 

emerging governance issues, allowing the Board to better understand the priorities and perspectives of our stockholders and determine how best to incorporate them into the Board’s decision making. Throughout 2020, our integrated team met with a variety of investors representing almost 40% of our outstanding shares to solicit feedback and engage in robust discussions regarding Board composition, executive compensation, our ESG disclosures, and Board oversight of ESG matters. In addition to the engagement conducted by our integrated outreach team, I personally had the opportunity to meet with investors representing almost 30% of our outstanding shares so that I could give voice to the direct feedback and helpful insights gained through our outreach team’s engagements during our boardroom deliberations. As always, these discussions are truly valuable to the Board and I look forward to our continued engagement with Intel stockholders and other stakeholders in 2021.

Continued ESG Leadership & Our RISE Strategy

Intel has a long history of leadership in corporate governance and corporate responsibility, including setting ambitious goals for our company, leading industry and multi-stakeholder initiatives, and collaborating with others to apply our technology to solve global challenges. Our integrated approach enables us to mitigate risks, reduce costs, protect brand value, and identify market opportunities, in turn creating value for Intel, our stockholders, and the communities we serve. Under the Board’s oversight, we have embedded corporate responsibility and sustainability considerations into our corporate strategy, compensation, disclosure, and long-term goals. To reinforce and align our executives to these goals, since 2008 a portion of the operational performance component of our annual incentive cash program has been tied to key corporate responsibility goals within our executive and employee compensation, including inclusion and environmental metrics.

In 2020, we achieved an important milestone in our journey when we reviewed our performance under our 2020 corporate responsibility goals and launched our 2030 RISE strategy and goals to create a more responsible, inclusive, and sustainable world, enabled through our technology and the expertise and passion of our employees. which formally established our goals and aspirations for the next decade, including:

§   Responsible – providing leadership in advancing safety, wellness, and responsible business practices across our global manufacturing operations, our value chain, and beyond;

 

§   Inclusive – advancing diversity and inclusion across our global workforce and industry, and expand opportunities for others through technology, inclusion, and digital readiness initiatives;

 

§   Sustainable – leading the industry in sustainability and enabling our customers and others to reduce their environmental impact through our actions and technology; and

 

§   Enabling – accelerating the ways in which we will enable progress through our technology and the contributions of Intel employees through new models of collaboration with our customers and other stakeholders.

The Board receives regular updates on our progress on our performance and corporate responsibility goals. We are proud of what our company has accomplished to date—but as we look toward the next decade, we know that even greater leadership will be required to deliver on our company’s purpose to create world-changing technology that enriches the lives of every person on earth.

On behalf of the Board, I thank you for choosing to invest in Intel and for continuing to entrust us to help lead the company into this new and exciting phase of our evolution.

Sincerely,

 

LOGO  

LOGO

 

Omar Ishrak

Chairman of the Board

 

Intel Corporation

2200 Mission College Blvd.

Santa Clara, CA 95054-1549

(408) 765-8080

 

 

     

 

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 Intel Corporation Notice of 2021 Annual Stockholders’ Meeting

      
      

 

Date   Time   Record Date
Thursday, May 13, 2021   8:30 A.M. Pacific Time   March 19, 2021

 

 

How to Vote

Please act as soon as possible to vote your shares, even if you plan to attend the annual meeting online. If you are a beneficial stockholder, your broker will NOT be able to vote your shares with respect to the election of directors and most of the other matters presented during the meeting unless you have given your broker specific instructions to do so. We strongly encourage you to vote. You may vote via the Internet, by telephone, or, if you have received a printed version of these proxy materials, by mail. For more information, see “Additional Meeting Information” on page 117.

Vote

 

 

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  ONLINE at www.proxyvote.com. You may also attend the annual meeting online, including to vote and/or submit questions, at www.virtualshareholdermeeting.com/Intel21.
LOGO  

BY PHONE by calling the applicable number.

For stockholders of record: (800) 690-6903

For beneficial stockholders: (800) 454-8683

LOGO   BY MAIL if you have received a printed version of these proxy materials.

Attend the Meeting

Logistics

 

  §   Stockholders of record may attend the annual meeting online, including to vote, view the list of list of stockholders as of March 19, 2021 and/or submit questions, at www.virtualshareholdermeeting.com/Intel21.
  §   If you are a beneficial stockholder and your voting instruction form or Notice of Internet Availability of Proxy Materials indicates that you may vote those shares through the www.proxyvote.com website, then you may access, participate in, and vote at the annual meeting with the 16-digit access code indicated on that voting instruction form or Notice of Internet Availability. Otherwise, beneficial stockholders should contact their bank, broker or other nominee (preferably at least 5 days before the annual meeting) and obtain a “legal proxy” in order to be able to attend, participate in or vote at the annual meeting.

 

  §   The annual meeting will begin at approximately 8:30 a.m. Pacific Time, with log-in beginning at 8:15 a.m., on Thursday, May 13, 2021.

Asking Questions

 

  §   You may submit questions for the meeting in advance at www.proxyvote.com.

 

  §   You may submit live questions during the meeting at www.virtualshareholdermeeting.com/Intel21.

 

 

If You Cannot Attend, Following The Meeting:  

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Scan this code to your phone to receive all of the meeting details.

§   A replay of our annual meeting webcast will be available at our Investor Relations website at www.intc.com and remain for at least one year.

 

§   A list of answers to investors’ questions received before and during the annual meeting will be available at the same website.

 

 

  Management Proposals

 

  

 

Voting Recommendation

of the Board

 

 

  1.

   Election of the nine director nominees named in this proxy statement    FOR EACH DIRECTOR NOMINEE
  2.    Ratification of selection of Ernst & Young LLP as our independent registered public accounting firm for 2021    FOR

  3.

 

  

Advisory vote to approve executive compensation of our listed officers

 

  

FOR

 

 

  Stockholder Proposals

 

    

 

  4.

   Stockholder proposal on whether to allow stockholders to act by written consent, if properly presented at the meeting    AGAINST
  5.    Stockholder proposal requesting a report on median pay gaps across race and gender, if properly presented at the meeting    AGAINST
  6.   

Stockholder proposal requesting a report on whether written policies or unwritten norms at the company reinforce racism in company culture, if properly presented at the meeting

 

   AGAINST

IMPORTANT NOTICE REGARDING THE INTERNET AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD MAY 13, 2021: THE NOTICE OF 2021 ANNUAL STOCKHOLDERS’ MEETING AND PROXY STATEMENT AND THE 2020 ANNUAL REPORT ON FORM 10-K ARE AVAILABLE AT WWW.INTC.COM

 

     

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Intel Corporation Notice of 2021 Annual Stockholders’ Meeting  |  2021 PROXY STATEMENT

 

 

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 Table of Contents

      
      

 

3    Letter from Your Chairman
6    Notice of 2021 Annual Stockholders’ Meeting
8    Proxy Statement Highlights
 
Board of Directors Matters
16    Proposal 1: Election of Directors
23    Director Skills, Experience, and Background
26    Board Diversity and Refreshment
 
Corporate Governance Matters
28    Board Leadership Structure
34    Board Responsibilities and Committees
40    Investor Engagement
44    Our Capital
53    Director Compensation
58    Security Ownership of Certain Beneficial Owners and Management
 
Audit Committee Matters
60    Proposal 2: Ratification of Selection of Independent Auditor
62    Report of the Audit Committee
 
Listed Officer Compensation Matters
64    Proposal 3: Advisory Vote to Approve Executive Compensation
65    Compensation Discussion and Analysis
65   

Executive Summary

75   

2020 Compensation of Our Listed Officers

84   

Update on 2019 Strategic Growth Equity Awards

86   

Other Aspects of our Executive Compensation Programs

91    Report of the Compensation Committee
92    Summary Compensation Table
96    Grants of Plan-Based Awards
98    Stock Option Exercises and Stock Vested
99    Outstanding Equity Awards
100    Pension Benefits
101    Non-Qualified Compensation
102    Other Potential Post-Employment Payments
 
Additional Compensation Matters
106    CEO Pay Ratio
 
Stockholder Proposals
108    Proposal 4: Written Consent
111    Proposal 5: Gender/Racial Pay Equality
114    Proposal 6: Anti-Racism in Company Culture
 
Additional Meeting Information
117    Online Meeting
117    Meeting Admission
118    Vote Before or During the Meeting
 
Other Matters
120    2022 Stockholder Proposals or Nominations
121    Communicating with Us
A-1    Appendix A: Non-GAAP Financial Measures

  Index Of Frequently   Requested Information

 

  61    Auditor Fees
  58    Beneficial Ownership Table
  27    Board Evaluations
  28    Board Leadership
  106    CEO Pay Ratio
  15    CEO Transition
  90    Claw-Back Policies
  57    Code of Conduct
  36    Compensation Consultant
  33    Corp. Gov. Guidelines
  43    Corporate Responsibility / ESG
  34    Director Attendance
  31    Director Independence
  17    Director Biographies
  25    Director Skills Matrix
  26    Director Tenure
  9    Financial Performance
  49    Human Capital
  33    ISG Framework
  65    Listed Officers for 2020
  73    Pay-for-Performance
  87    Peer Group
  89    Perks
  56    Related Party Transactions
  29    Risk Oversight
  89    Stock Ownership Guidelines
  11    Strategy Update
  34    Succession Planning

 

 

Information in Proxy Statement Highlights—Introduction to Our Business (page 8), A Year in Review (page 9), Business Overview (page 10), Our Strategy (page 11), and Our Capital (pages 12, 44-52) is reproduced from our 2020 Annual Report on Form 10-K and speaks as of January 22, 2021, the date we filed our Form 10-K.

 

 

     

 

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Intel put the Silicon in Silicon Valley, and today our technology remains at the core of the most exciting, life-changing innovations on the planet

We are an industry leader, creating world-changing technology that enables global progress and enriches lives. We stand at the brink of several technology inflections—AI, 5G network transformation, and the rise of the intelligent edge1—that together will shape the future of technology. Silicon and software drive these inflections, and Intel is at the heart of it all with data emerging as a transformational force in this era where an explosion of devices permeates all our interactions. That data must be moved, stored, and processed faster and more securely than ever before. We are unleashing the potential of data to unlock value for people, business, and society on a global scale.

With a clear, shared purpose, we are inspired to create, innovate, and push the boundaries of technology. Our commitment to corporate responsibility and to creating an inclusive environment for our amazing people supports of belonging, Intel can be more innovative, agile, and competitive.

 

 

1 

Intel’s definition is included in “Key Terms” within the Financial Statements and Supplemental Details in our Annual Report on Form 10-K.

 

 

     

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 A Year in Review

      
      

 

We achieved record revenue of $77.9 billion, with 49% from
our data-centric businesses, amid the effects of the
COVID-19 pandemic. The dynamic of work and learn from
home resulted in strong demand for notebook PCs, while
demand for desktop PCs weakened. Demand in the DCG
cloud service providers market segment grew, while
enterprise and government declined on macroeconomic
weakness. We shipped a higher volume of 10nm products
than we had anticipated at the beginning of the year. The
increased mix of 10nm, combined with a higher portion of
revenue from lower margin adjacent businesses, offset higher
platform revenue and drove a decline in gross margin of 3
percentage points. We invested $13.6 billion in R&D, reduced
our spending to 25.3% of revenue, and signed an agreement
to divest our NAND memory business. We made capital
investments of $14.3 billion, and generated $35.4 billion
cash from operations and $21.1 billion of free cash flow. We
also returned $19.8 billion to stockholders, including
$5.6 billion in dividends and $14.2 billion in buybacks.
  

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“We achieved record revenue for the fifth consecutive year and maintained a strong balance sheet and liquidity position. Our results amid the challenges of a global pandemic and an uncertain economy reflect the importance of our technology and the resilience of our employees around the world.”

 

—George Davis

Chief Financial Officer

 

 

 Revenue    

 

  Operating Income    

 

  Diluted EPS    

 

  Cash Flows

 

PC-centric $B

Data-centric $B

   

 

GAAP $B              Non-GAAP $B

   

 

GAAP              Non-GAAP

   

 

Operating Cash Flow $B

Free Cash Flow1 $B

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$77.9B

 

GAAP

     

$23.7B

 

GAAP

 

$25.3B

 

non-GAAP1

     

$4.94

 

GAAP

 

$5.30

 

non-GAAP1

     

$35.4B

 

GAAP

 

$21.1B

 

non-GAAP1

Revenue up 8% from 2019; Data-centric up 9% and PC-centric up 8%     Operating income up $1.6B or 7% from 2019; 2020 operating margin at 30%   Operating income up $1.5B or 6% from 2019; 2020 operating margin at 32%     Diluted EPS up $0.23 or 5% from 2019   Diluted EPS up $0.43 or 9% from 2019     Operating cash flow up $2.2B or 7%; operating cash flow to net income at 169%   Free cash flow up $4.2B or 25%; free cash flow to non-GAAP net income at 94%

 

Strong demand in notebook PCs and DCG cloud and communications market segments, and NAND pricing recovery, partially offset by weakened demand in desktop PCs and lower platform2 ASPs   Higher gross margin dollars driven by higher platform unit sales, NAND pricing recovery, and improved NAND unit cost, partially offset by higher platform unit cost with increased 10nm product mix, and lower platform ASPs   Higher gross margin dollars, lower shares outstanding, and equity investment gains, partially offset by higher effective tax rate   Working capital changes driven by accounts receivable, inventory and income taxes offset by other assets and liabilities; free cash flow up due to higher operating cash flow and lower capital spending

 

                             
Goal (2019 - 2021)3      

Goal (2019 - 2021)3

      Goal (2019 - 2021)3       Goal (2019 - 2021)3
Low single-digit growth over the next three years to $76B-$78B;
data-centric businesses high single-digit growth and PC-centric business approximately flat to slightly down
    Keep non-GAAP operating margin roughly flat at approximately 32% over the next three years     Grow non-GAAP diluted EPS in line with revenue over the next three years     Achieve free cash flow of approximately 80% of non-GAAP net income by 2021
Progress       Progress       Progress       Progress
Revenue grew 8% from 2019 to 2020, to $77.9B     Non-GAAP operating margin was 32% in 2020     Non-GAAP diluted EPS grew 9% from 2019 to 2020; revenue grew 8% over the same period     Free cash flow in 2020 was 94% of non-GAAP net income

 

 

This section is reproduced from our 2020 Annual Report on Form 10-K and speaks as of January 22, 2021.

1

See “Non-GAAP Financial Measures” within MD&A in our 2020 Annual Report on Form 10-K.

2

See “Our Products” within MD&A in our 2020 Annual Report on Form 10-K .

3

2019-2021 goals were announced during the May 2019 Investor Meeting.

 

     

 

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 Business Overview

      
      

 

COVID-19 Response

The COVID-19 pandemic has changed the lives of our employees, our customers, and our community. We are proud of how our team has responded, showing resilience, innovating in real time, and demonstrating the tremendous value of our worldwide manufacturing network to customers and partners around the world. Additionally, we launched our Pandemic Response Technology Initiative, which supports essential workers, hard-hit businesses, and students of all ages with Intel-funded projects led by employees along with our global customers and partners. We have learned vital lessons about the critical role technology can play, and has played, in so many areas during the pandemic—from healthcare and telehealth, to remote learning, to innovative technology solutions to help businesses safely reopen. Most importantly, as a company, we have learned to operate with more empathy, agility, and velocity. We look at our products not for what we know they can do, but for what they might be able to do in a changed world.

 

 Data-Centric Businesses Expand with New Opportunities     PC-Centric Business Innovates 

Data-centric portfolio for 5G network infrastructure

 

We introduced a broad, data-centric portfolio for 5G network infrastructure, including the Intel® Atom® P5900, our first Intel® architecture-based 10nm SoC for wireless base stations; a next-generation structured ASIC for 5G network acceleration; new 2nd Gen Intel® Xeon® Scalable processors; and the Intel® Ethernet 700 Series Network Adapter with hardware-enhanced Precision Time Protocol, the first 5G network-optimized Ethernet NIC.

 

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11th Gen Intel® Core processors

 

We launched our new processor family for laptops, 11th Gen Intel Core processors with Intel® Iris® Xe graphics leveraging our new 10nm SuperFin process technology. The 11th Gen Intel Core processors optimize power efficiency with leading performance and responsiveness while running at significantly higher frequencies versus prior generations.

 

 

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Ice Lake server processors

 

We are now shipping the 10nm-based 3rd Gen Intel Xeon Scalable processors (previously referred to as Ice Lake), which include several architectural, process technology, and platform innovations for performance, security, and operational efficiency.


Moovit acquisition

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We acquired Moovit for $915 million to accelerate Mobileye’s MaaS offering. Moovit is known for its urban mobility application and brings Mobileye closer to achieving our plan to become a complete mobility provider, including robotaxi services.

 

Planned divestiture of NAND memory business

 

We signed an agreement with SK hynix Inc. (SK hynix), to divest our NAND memory business, including our NAND memory fabrication facility in Dalian, China and certain related equipment and tangible assets (Fab Assets), our NAND SSD business (NAND SSD Business), and our NAND memory technology and manufacturing business (NAND OpCo Business).

 

   

Intel® Evo platforms

 

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We introduced the Intel Evo platform brand for designs based on 11th Gen Intel Core processors with Intel Iris Xe graphics. Devices with the Intel Evo platform brand are verified, measured, and tested and key experience indicators as part of the next edition of our laptop innovation program, Project Athena.

 

xPU era with oneAPI and discrete GPUs

We launched discrete GPUs, including the Intel® Iris® Xe MAX GPU for laptops and the first discrete Intel® Server GPU. These are milestone additions to our expanding portfolio of xPUs. We also announced the Gold release of Intel® oneAPI Toolkits, supporting Intel CPUs, GPUs, and FPGAs, which are now available for local installation and for Intel® DevCloud. We are expanding the Intel DevCloud to support the new Intel Iris Xe GPU hardware, including Intel Iris Xe MAX GPU for public access and Intel Iris Xe-HP for select developers.

7nm-based CPU products

We announced in July that our 7nm-based CPU product timing would be delayed and that the primary driver was the yield of our 7nm manufacturing process. We will continue to invest in our future process technology roadmap and advanced packaging technologies to differentiate our products, provide manufacturing optionality and deliver a predictable cadence of leadership products to our customers.

 

 2030 RISE Strategy and Corporate Responsibility Goals

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We created our RISE strategy and established our 2030 corporate responsibility goals (2030 goals), through which we aim to leverage our leadership position in the global technology ecosystem to create a more responsible, inclusive, and sustainable world, enabled through our technology and the expertise and passion of our employees.

 

Our RISE strategy and 2030 goals are deeply rooted in our corporate purpose and aligned with our business strategy to enable us to create value for our customers, investors, employees, and other stakeholders over the next decade and beyond.

 

 

This section is reproduced from our 2020 Annual Report on Form 10-K and speaks as of January 22, 2021.

 

     

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Proxy Statement Highlights: Business Overview  |  2021 PROXY STATEMENT

 

 

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 Our Strategy

      
      

 

Our strategy is to play a larger role in our customers’ success by delivering a predictable cadence of leadership products.

The world is changing and driving the need for exponentially more computing. First we experienced the PC era, followed by the mobile and cloud era. We are now entering the era of distributed intelligence, where computing is pervasive and so many things in our lives—our homes, our cars, our hospitals, and our cities—now function like computers. In this world of distributed intelligence, our three fastest growing opportunities are AI, 5G network transformation, and the intelligent and autonomous edge.

We have a history of transforming to capitalize on market shifts, and we are in the midst of another significant transformation to position ourselves and our customers for growth. With our focus on execution and re-energized culture as a force multiplier, we are transforming from a CPU to a multi-architecture xPU company, from silicon to platforms, and from a traditional IDM to a new, modern IDM. Our priorities are to strengthen our core, extend our reach, and redefine our position in the industry. Our capital provides a foundation to invest in our growth and to supplement and strengthen our capabilities. We are thoughtfully deploying capital and focusing our investment in differentiated technologies where we can play a bigger role in the success of our customers and deliver attractive returns to our stockholders.

Our Priorities

 

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Improve Execution to Strengthen Our Core

 

We have made changes that help position us to sharpen our operational excellence and process technology. We have streamlined our product roadmaps, evolved our technical organization to drive greater transparency and accountability, and exited businesses to enable focus on our core strategy.

 

Extend Our Reach to Accelerate Our Growth

 

Diverse product portfolio to capitalize on the fastest growing opportunities. The proliferation of data analytics, edge computing, and AI is driving a diverse and expanding range of computing applications from edge to cloud. In response, we are innovating to deliver products including a mix of scalar, vector, matrix, and spatial architectures deployed in CPUs, GPUs, accelerators, and FPGAs—unified by an open, industry-standard programming model, oneAPI, to simplify application development.

   

Redefine Our Position in the Industry

 

Solve our customers’ problems through solutions and platforms. We are expanding beyond the CPU to better solve our customers’ problems, and not just deliver parts of the solution. With our xPU portfolio, platform vision, IDM capabilities, and scale, we are able to help our customers tackle their own opportunities. We announced the Intel Evo platform brand powered by 11th Gen Intel Core processors with Intel Iris Xe graphics, representing laptop designs supported by Intel’s Project Athena innovation program. In addition, we acquired Moovit to accelerate Mobileye’s transformation to a full-stack MaaS provider that can provide hardware, software, sensors, integration, and large-scale services. We are actively evaluating opportunities in software, services, and solutions, in AI, network transformation, and intelligent edge.

 

 

This section is reproduced in part from our 2020 Annual Report on Form 10-K and speaks as of January 22, 2021.

 

     

 

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 Our Capital

      
      

 

We deploy various forms of capital to execute our strategy in a way that seeks to reflect our corporate values, help our customers succeed, and create value for our stakeholders.

 

     
Capital   Strategy   Value

Financial

 

LOGO

 

  Leverage financial capital to invest in ourselves and grow our capabilities, supplement and strengthen our capabilities through acquisitions and strategic investments, and provide returns to stockholders.   We strategically invest financial capital to create long-term value and provide returns to our stockholders in the form of dividends and buybacks.

Intellectual

 

LOGO

 

  Invest significantly in R&D and IP to enable us to deliver a predictable cadence of leadership products that move, store, and process data at scale, and extend our reach to accelerate our growth.   We develop IP to enable next-generation products, create synergies across our businesses, expand into new markets, and establish and support our brands.

Manufacturing

 

LOGO

 

  Invest timely and at a level sufficient to meet customer demand for current technologies and prepare for future technologies as we evolve our IDM model.   Our manufacturing scope and scale enable us to provide our customers and consumers with a broad range of leading-edge products.

Human

 

LOGO

 

  Continue to build a diverse, inclusive, and safe work environment to attract, develop, and retain the talent needed to remain at the forefront of innovation.   Our talented employees enable the development of solutions and enhance the intellectual and manufacturing capital critical to helping our customers win the technology inflections of the future.

Social and Relationship

 

LOGO

 

  Build trusted relationships for both Intel and our stakeholders, including employees, suppliers, customers, local communities, and governments.   We collaborate with stakeholders on programs to empower underserved communities through education and technology, and on initiatives to advance accountability and capabilities across our global supply chain, including accountability for the respect of human rights.

Natural

 

LOGO

 

  Continually strive to reduce our environmental footprint through efficient and responsible use of natural resources and materials used to create our products.   Our proactive efforts help us mitigate climate and water impacts, achieve efficiencies, and lower costs, and position us to respond to the expectations of our stakeholders.

 

 

Value We Create

 

Each of our six forms of capital plays a critical role in our long-term value creation. We consider numerous indicators in determining the success of our capital deployment in creating value. Highlights of value created in 2020 are as follows:

 

† This section is reproduced from our 2020 Annual Report on Form 10-K and speaks as of January 22, 2021.

 

2  See “Non-GAAP Financial Measures” within Appendix A.

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 Overview of the Board

      
      

 

For the 2021 Annual Stockholders’ Meeting, our Board recommends the following nine director nominees listed below. Our Board considers numerous factors when assessing the qualifications for each Board nominee, such as skills and experience relevant and integral to our future strategic direction; independence; understanding of and experience in manufacturing, technology, finance, and marketing; senior leadership experience; international experience; mix of ages; and gender, racial, geographic, and ethnic diversity. In this regard, our Board is committed to actively seeking women and minority director candidates for consideration.

 

Independent Director Nominees

 

LOGO

Omar Ishrak

Age: 65

Director Since: 2017

Independent Chairman

  

LOGO

James J. Goetz

Age: 55

Director Since:
2019

  

LOGO

Alyssa Henry

Age: 50

Director Since:
2020

  

LOGO

Risa Lavizzo-Mourey

Age: 66

Director Since:
2018

  

LOGO

Tsu-Jae King Liu

Age: 57

Director Since:
2016

  

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Gregory D. Smith

Age: 54

Director Since:
2017

  

LOGO

Dion J. Weisler

Age: 53

Director Since:
2020

  

LOGO

Frank D. Yeary

Age: 57

Director Since:
2009

  

 

Non-Independent Director Nominee

 

       

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Patrick P. Gelsinger

Age: 60

Director Since: 2021

Chief Executive Officer

     
   

33%

of Director

Nominees

are Women

 

 

33%

of Director

Nominees

are Ethnically

Diverse

 

3.4 YRS

Average

Tenure of

Director

Nominees

 

     

 

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 Board Responsiveness to Investors in 2020

      
      

 

Our relationship with our stockholders is an important part of our company’s success and we have a long tradition of engaging with our stockholders and obtaining their perspectives. Following a disappointing “say on pay” vote in 2020, which received approximately 49.7% support, we undertook extensive engagement efforts to better understand the reasons for how our investors voted, as well as to obtain their views on other key corporate governance and disclosure matters, and to determine how best to respond.

 

                   

Who we met with           

    

50.4%

 

 

 

 

   39.5%  

 

 

 

   29.7%  
      

of shares contacted

for engagement

          

of shares engaged

with overall

          

of shares engaged

by Chairman of the Board

 

   

An integrated outreach
team

 

     

 

Independent Chairman (select meetings)

 

 

+

 

 

Corporate Secretary Office

 

 

+

 

 

Human Resources

Office

 

 

+

 

 

Corporate Responsibility

Office

 

 

+

 

 

Investor Relations

                       

What we discussed        

    

Our business

     Our ESG practices    >35          
      

Strategy execution Cultural transformation Financial performance COVID-19 response

  

   Executive pay programs    Board composition

   Human capital management

   Environmental & social issues

  

Separate investor meetings throughout the year

 

                   

How we responded       

    Board composition    See page 26
   

LOGO     Added new directors with experience aligned with our strategic transformation

 

   

 

Executive compensation

  

 

See page 65

   

LOGO     Increased Annual Cash Bonus Plan rigor; beginning 2021, financial metrics in the Annual Cash Bonus Plan will be revenue and net income, with payouts based on pre-established threshold/target/max levels

   

LOGO     Provided enhanced disclosure of our One Intel operational goals in the Annual Cash Bonus Plan, as well as the Compensation Committee’s rationale for maintaining our PSUs’ relative TSR metric based on the S&P 500 IT Index

   

LOGO     Provided an update on how the 2019 Strategic Growth Equity Awards are tracking

 

   

 

Environmental and social

  

 

See page 79

     

LOGO     Incorporated specific carbon emissions, water use, and workforce D&I goals into bonus program

 

Where to Find More Information

See “Investor Engagement” on page 40 and “Investor Engagement and the 2020 ‘Say on Pay’ Vote” on page 70

 

     

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Table of Contents

 

 Executive Compensation Summary

      
      

 

Intel’s executive compensation programs are designed to incentivize the implementation of our growth strategy. There are three key drivers of our executive compensation programs: a competitive pay positioning strategy, a heavy emphasis on incentive-driven pay, and goals that are appropriately aligned with our business strategy (in terms of both selection and attainability). Our executive compensation programs focus on different performance metrics for the different performance periods to balance the incentives.

Our executive compensation programs continue to be tied to the company’s financial and operational performance, support our commitment to good compensation governance, and provide market-based opportunities to attract, retain, and motivate our executives in an intensely competitive market for qualified talent.

Overview of Listed Officer Total Direct Compensation for 2020

 

 

 

Pay Element

  Purpose       Performance  
Period  
 

Performance

Metrics

  2020 Decisions / Results    

Base

Salary

  Designed to be market-competitive and attract and retain talent     Annual      

§  No changes to listed officers’ base salary in 2020

 
           

Annual

Cash Bonus

  Incentivize achievement of Intel’s near-term financial and operational objectives, consistent with Intel’s longer-term goals     Annual    

§  YoY net income growth (1/3)

 

§  Relative net income growth vs. tech peers (1/3)

 

§  One Intel operational goals (1/3)

 

§  No changes to annual incentive cash target opportunities

 

§  Financial performance accounted for 66% of bonus potential—up from 50% in prior years

 

§  Payout of 100.7% of target vs. 104-114% for 2019

 
           

Quarterly

Cash Bonus

  Company-wide program that rewards quarterly profitability based on Intel’s net income relative to company compensation costs    

Quarter  

 

§  Net income relative to company compensation costs

 

 

§  No changes to quarterly cash bonus program

 

§  Annual payout of 23.2 extra days of compensation vs. 24.6 in 2019

 
           

Restricted

Stock Units

  Facilitates stock ownership, executive retention, and stockholder alignment     Three   years with   quarterly   vesting    

§  Stock price appreciation

 

§  Represents 20% of target long-term incentive award opportunity

 

§  No increase in target value from 2019 other than in connection with promotions

 
           

Performance
Stock Units

  Designed to reward long-term profitability and long-term performance relative to peers; to create and alignment with stockholders; and to facilitate executive retention    

Three   years  

 

§  Relative TSR vs. S&P 500 IT Index (50%)

 

§  Cumulative EPS growth compared to a target established at the beginning of the three-year performance period (50%)

 

§  Represents 80% of target long-term incentive award opportunity

 

§  No increase in target value from 2019 other than in connection with promotions

 

§  No change in performance metrics or payout opportunity (0-200% of target) from 2019

 

§  For max payout, TSR must exceed index by 25+ percentage points

 

§  EPS target set to be challenging; factors in planned share buybacks

 

2021 CEO Transition

 

In early 2021, the Board of Directors implemented a leadership transition, appointing Mr. Gelsinger as CEO effective February 15, 2021, at which time he also joined the Board. The Board determined that this was the right time to change company leadership in order to draw on Mr. Gelsinger’s deep technology and engineering expertise during this critical period of transformation at Intel, and to further enhance the company’s ability to attract top-tier engineering talent. Mr. Gelsinger is a former long-term Intel executive and a highly respected technology industry veteran with a distinguished track record of innovation and talent development. He spent the past eight years successfully leading VMware, Inc., another large technology company, where annual revenues nearly tripled and stock price and market capitalization reached all-time highs during his tenure.

For more information regarding compensation decisions related to Intel’s CEO Transition, please see the “Compensation Discussion & Analysis” on page 65.

 

     

 

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 Proxy Statement

      
      

 

LOGO   

Intel Corporation

2200 Mission College Blvd.

Santa Clara, CA 95054-1549

Our Board of Directors solicits your proxy for the 2021 Annual Stockholders’ Meeting (and any postponement or adjournment of the meeting) for the matters set forth in the “Notice of 2021 Annual Stockholders’ Meeting.” We made this proxy statement available to stockholders beginning on March 30, 2021.

 

 

 Proposal 1

      
      

Election of Directors

Upon the recommendation of our Corporate Governance and Nominating Committee, our Board has nominated the nine individuals listed below to serve as directors. Our nominees include eight independent directors, as defined in the rules for companies traded on the Nasdaq Global Select Market* (Nasdaq), and one Intel officer: Patrick P. Gelsinger, who became our Chief Executive Officer in February 2021. Dr. Omar Ishrak has served as the independent Chairman of the Board since January 2020.

Each of our director nominees currently serves on the Board and was elected to a one-year term at the 2020 Annual Stockholders’ Meeting, except for Dion J. Weisler, who was appointed to the Board in June 2020, and Mr. Gelsinger, who was appointed to the Board in February 2021. Andy D. Bryant and Reed E. Hundt retired from the Board in May 2020. Andrew Wilson is not standing for re-election at the 2021 Annual Stockholders’ Meeting.

Each director’s term runs from the date of their election until our next annual stockholders’ meeting and until their successor (if any) is elected or appointed. If any director nominee is unable or unwilling to serve as a nominee at the time of the annual meeting, the individuals named as proxies may vote for a substitute nominee chosen by the present Board to fill the vacancy. Alternatively, the Board may reduce the size of the Board, or the proxies may vote just for the remaining nominees, leaving a vacancy that the Board may fill at a later date. However, we have no reason to believe that any of the nominees will be unwilling or unable to serve if elected as a director.

Our Amended and Restated Bylaws (Bylaws) provides that a director nominee is elected only if they receive a majority of the votes cast with respect to their election in an uncontested election (that is, the number of votes cast “for” that nominee exceeds the number of votes cast “against” that nominee). You can vote to “abstain,” but that vote will not have an effect in determining the election results. For more information, see “Additional Meeting Information; Voting Before or During the Meeting” on page 118. If a nominee who currently serves as a director is not re-elected, Delaware law provides that the director would continue to serve on the Board as a “holdover director.” Under our Bylaws and the Amended and Restated Board of Directors Guidelines on Significant Corporate Governance Issues (Corporate Governance Guidelines), each director must submit an advance, contingent, irrevocable resignation that the Board may accept if stockholders do not re-elect that director. In that situation, our Corporate Governance and Nominating Committee would make a recommendation to the Board about whether to accept or reject the resignation, or whether to take other action instead. Within 90 days from the date of the certified election results, the Board would act on the Corporate Governance and Nominating Committee’s recommendation and publicly disclose its decision and the rationale behind it.

For each of the nine director nominees standing for election, the following pages set forth certain biographical information, including a description of their principal occupation, business experience, and the primary qualifications, attributes and skills (represented by the icons below) that the Corporate Governance and Nominating Committee considered in recommending them as director nominees, as well as the Board committees on which each director nominee will serve as of the 2021 Annual Stockholders’ Meeting.

 

 

LOGO  

Recommendation of the Board

The Board recommends that you vote “FOR” the election of each of the following nominees.

 

LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO
Senior
Leadership
Experience
  Global/
International
Experience
  Industry
and IT/
Technical
Experience
  Financial
Expertise
  Human
Capital
Experience
  Operating and
Manufacturing
Experience
  Sales,
Marketing
and Brand
Management
  Emerging
Technologies
and Business
Models
  Business
Development
and M&A
Experience
  Cybersecurity/
Information
Security
  Government,
Legal, and
Regulatory
  Public
Company
Board

 

     

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Table of Contents

    

LOGO

Other Current Public Boards:

VMware, Inc.

Skills & Expertise:

 

LOGO   LOGO   LOGO   LOGO   LOGO   LOGO
LOGO   LOGO   LOGO            

 

Patrick P. Gelsinger CEO

    

Age: 60        Director Since: 2021

 

Patrick P. Gelsinger has been a director and CEO of Intel since February 2021. Mr. Gelsinger joined Intel from VMware, Inc., a provider of cloud computing and virtualization software and services, where he served as CEO from September 2012 to February 2021. Prior to joining VMware, Mr. Gelsinger served as President and Chief Operating Officer, EMC Information Infrastructure Products at EMC Corp., a data storage, information security and cloud computing company, from September 2009 to August 2012. Mr. Gelsinger’s career began at Intel, where he spent 30 years before joining EMC Corp. During his initial tenure at Intel, Mr. Gelsinger served in a number of roles, including Senior Vice President and Co-General Manager of the Digital Enterprise Group from 2005 to September 2009, Senior Vice President, Chief Technology Officer from 2002 to 2005 and leader of Desktop Products Group prior to that. Mr. Gelsinger also serves as a member of the board of directors of VMware, Inc.

 

 

Qualifications:

As a seasoned industry veteran with over 40 years of experience in semiconductor, software, and cloud computing and data storage industries and in his role as our new CEO, Mr. Gelsinger brings significant senior leadership, global, industry, human capital, sales, operating, business development and M&A, and public company board experience to the Board. Mr. Gelsinger has gained extensive operating and manufacturing, sales, emerging technologies, M&A, and information security experience from serving in a variety of senior management roles, including CEO and COO, at leading multinational software, information security and computing companies. Having started his career at Intel, he has over 30 years of direct knowledge and experience in Intel’s culture, business development, strategy, and growth. Mr. Gelsinger also brings human capital and technical experience from his various senior leadership roles.

 

    

LOGO

Other Current Public Boards:

Palo Alto Networks

Committees:

Corporate Governance and Nominating, and M&A*

Skills & Expertise:

 

LOGO   LOGO   LOGO   LOGO   LOGO   LOGO

 

 

James J. Goetz

    

Age: 55        Director Since: 2019

 

James J. Goetz has served as a partner of Sequoia Capital, a venture capital firm, since June 2004. Prior to joining Sequoia, Mr. Goetz co-founded VitalSigns Software, a software design, development, and strategy company, where he assembled and led the team that pioneered end-user performance management. Prior to VitalSigns, he was Vice President of Network Management for Bay Networks. Mr. Goetz previously served on the boards of directors of Barracuda Networks Inc., a data security and storage company from 2009 to 2017; Nimble Storage Inc., a data storage company, from 2007 to 2017; Jive Software Inc., a provider of social business software, from 2007 to 2015; and Ruckus Wireless Inc., a manufacturer of wireless (Wi-Fi) networking equipment, from 2012 to 2015, among others. Mr. Goetz holds a bachelor of science (BS) degree in electrical engineering from the University of Cincinnati and a master of science degree in electrical engineering from Stanford University. Mr. Goetz currently serves on the boards of several privately held companies. Mr. Goetz also serves as a member of the board of directors of Palo Alto Networks Inc., a network security solution company.

 

 

Qualifications:

Mr. Goetz brings to the Board senior leadership, industry and information technology (IT), emerging technologies, business development, and cybersecurity experience from his experience as a partner of a venture capital firm, where he focuses on cloud, mobile, and enterprise technology investments, as well as providing guidance and counsel to a wide variety of internet and technology companies, and his prior work in networks, data security and storage, software, and manufacturing through various senior roles and other board experiences. Mr. Goetz’s experience with internet and technology companies brings depth to the Board in areas that are important to Intel’s business as it moves from a CPU to a multi-architecture xPU company, from silicon to platforms, and from a traditional IDM to a new, modern IDM.

 

*

Effective after the conclusion of Intel’s 2021 Annual Stockholders’ Meeting, provided he/she is re-elected to the Board by stockholders at the meeting. For more information on committee changes, please see “Board Responsibilities and Committees” on page 34.

 

     

 

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LOGO

Other Current Public Boards:

Unity Software Inc.

Committees:

Audit and Finance, Compensation, and M&A*

Skills & Expertise:

 

LOGO   LOGO   LOGO   LOGO   LOGO   LOGO

 

Alyssa Henry

  

Age: 50        Director Since: 2020

 

Alyssa Henry has served as Seller Lead for Square, Inc., a provider of software, hardware and financial services for small businesses and individuals, since 2014. She oversees global engineering, product management, design, sales, marketing, partnerships and support for Square’s seller-facing software and financial services products. Prior to Square, she served in various positions with Amazon.com, Inc. from 2006 to 2014, including as Vice President of Amazon Web Services Storage Services, where she led services including Amazon S3, Amazon EBS, and Amazon Lambda; and as Amazon’s director of software development for ordering, with responsibility for Amazon’s ordering workflow software and databases. Before Amazon, Ms. Henry spent 12 years at Microsoft Corporation working on databases and data access technologies in a variety of engineering, program management and product unit management roles. Ms. Henry started her career as a developer in the financial services industry. Ms. Henry holds a BS degree in applied science with a specialization in computing from the University of California, Los Angeles. She serves as a member of the board of directors of Unity Software Inc., a video game software development company.

 

 

Qualifications:

Ms. Henry brings senior leadership, industry and IT, emerging technologies and business models, and information security expertise to the Board from her executive experience at a mobile payment process company, including overseeing its expansion into other technology services for small businesses, and by her leadership of the software development segment of a multinational technology company that focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence. Ms. Henry’s more than 25 years of experience in software engineering and development of database and storage technologies is particularly useful to the Board as Intel moves from a PC-centric to data-centric company.

 

    

LOGO

Other Current Public Boards:

None

Committees:

Compensation, and Corporate Governance and Nominating*

Skills & Expertise:

 

LOGO   LOGO   LOGO   LOGO   LOGO   LOGO
LOGO   LOGO   LOGO            

 

Omar Ishrak INDEPENDENT CHAIRMAN

 

Age: 65        Director Since: 2017

 

Dr. Omar Ishrak was Executive Chairman of Medtronic plc, a global medical technology company until his retirement in December 2020. Dr. Ishrak served as Chairman and CEO of Medtronic from 2011 to April 2020. Prior to joining Medtronic, Dr. Ishrak served as President and CEO of GE Healthcare Systems, a comprehensive provider of medical imaging and diagnostic technology and a division of GE Healthcare, from 2009 to 2011. Dr. Ishrak was President and CEO of GE Healthcare Clinical Systems from 2005 to 2008 and President and CEO of GE Healthcare Ultrasound and BMD from 1995 to 2004. Dr. Ishrak is a member of the Board of Trustees of the Asia Society, a leading educational organization dedicated to promoting mutual understanding and strengthening partnerships among peoples, leaders, and institutions of Asia and the United States (U.S.) in a global context. Dr. Ishrak received his BS and PhD in electrical engineering from the University of London, King’s College.

 

 

 

Qualifications:

Dr. Ishrak brings senior leadership, operating and manufacturing, and international expertise to the Board from his position as Chairman and CEO of Medtronic and his long history of success as a global executive in the medical technology industry. From his role at Medtronic, Dr. Ishrak has extensive experience identifying and developing emerging technologies and has overseen a number of strategic acquisitions, enabling him to bring business development and mergers and acquisitions (M&A) experience to the Board. Dr. Ishrak held various product development and engineering positions at Philips Ultrasound. Dr. Ishrak also provides technical, human capital, and brand marketing expertise from his role as a leader of a global medical technology company.

 

*

Effective after the conclusion of Intel’s 2021 Annual Stockholders’ Meeting, provided he/she is re-elected to the Board by stockholders at the meeting. For more information on committee changes, please see “Board Responsibilities and Committees” on page 34.

 

     

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Table of Contents

    

LOGO

Other Current Public Boards:

General Electric Company and Merck & Co.

Committees:

Compensation and Corporate Governance and Nominating (Chair)

Skills & Expertise:

 

LOGO   LOGO   LOGO   LOGO        

 

Risa Lavizzo-Mourey

  

Age: 66        Director Since: 2018

 

Dr. Risa Lavizzo-Mourey retired in January 2021 after serving as the Robert Wood Johnson Foundation PIK Professor of Population Health and Health Equity at the University of Pennsylvania in Philadelphia, Pennsylvania, since 2018. Dr. Lavizzo-Mourey was President and CEO of the Robert Wood Johnson Foundation, the nation’s largest healthcare-focused philanthropic organization, based in Princeton, New Jersey, from 2003 to 2017, and Senior Vice President of that organization from 2001 to 2003. She previously held various appointments at the University of Pennsylvania Medical School, including Sylvan Eisman Professor of Medicine and Health Care Systems from 1995 to 2001, Director of the Institute on Aging from 1994 to 2002, and Chief of Geriatric Medicine from 1986 to 1992. Dr. Lavizzo-Mourey has also held several government positions, including Deputy Administrator of the Agency for Health Care Research and Quality from 1992 to 1994, Co-Chair of the White House Health Care Reform Task Force from 1993 to 1994, and member of a number of federal advisory committees. She received her MD from Harvard Medical School and MBA from the Wharton School of Business of the University of Pennsylvania. Dr. Lavizzo-Mourey serves on the board of directors of General Electric Company and Merck & Co., and served on the board of directors for Hess Corporation from 2004 to May 2020. She is also a member of the National Academy of Medicine, American Academy of Arts and Sciences, and the American Philosophical Society.

 

 

Qualifications:

Dr. Lavizzo-Mourey brings senior leadership, strategy, and human capital and talent development expertise to the Board from her leadership of the largest public health philanthropy in the U.S. for almost 15 years and, before that, serving for 15 years as a distinguished professor and administrator at the University of Pennsylvania. She also brings to the Board government experience from her various government appointments. Dr. Lavizzo-Mourey’s board service with other public companies also provides extensive public company board experience.

 

 

    

LOGO

Other Current Public Boards:

None

Committee:

Audit and Finance*

Skills & Expertise:

 

LOGO   LOGO   LOGO   LOGO   LOGO    

 

Tsu-Jae King Liu

  

Age: 57        Director Since: 2016

 

Dr. Tsu-Jae King Liu has served as Dean and Roy W. Carlson Professor of Engineering in the College of Engineering at the University of California, Berkeley (UC Berkeley) since 2018. She previously held a distinguished professorship endowed by Taiwan Semiconductor Manufacturing Company, Ltd. (TSMC) in the Department of Electrical Engineering and Computer Sciences at UC Berkeley from July 2014 to July 2018. Dr. Liu has also served as Vice Provost, Academic and Space Planning, and Senior International Officer at UC Berkeley from October 2016 to June 2018. Dr. Liu has over 20 years of experience in higher education in a range of faculty and administrative roles, including Associate Dean for Academic Planning and Development, College of Engineering in 2016, Chair of the Department of Electrical Engineering and Computer Sciences from July 2014 to June 2016, and Associate Dean for Research in the College of Engineering from 2008 to 2012. Her achievements in teaching and research have been recognized by a number of awards and honors, including induction into the Silicon Valley Engineering Hall of Fame. Dr. Liu was Co-founder and President of Progressant Technologies, a start-up company that developed negative differential resistance transistor technology, from May 2000 to October 2004. She served on the board of the Center for Advancing Women in Technology from October 2014 to May 2016. Dr. Liu earned her BS, master of science (MS) and PhD degrees, all in electrical engineering from Stanford University.

 

Qualifications:

As a scholar and educator in the field of semiconductor logic and memory devices, who conducts research on advanced materials, process technology and solid-state devices for energy-efficient electronics, Dr. Liu brings to the Board industry and technical experience directly related to Intel’s semiconductor device research and development, and manufacturing. As a Co-founder of Progressant Technologies, which was later acquired by Synopsys, Inc., and while serving on technical advisory boards for multiple start-up companies, Dr. Liu gained business development experience. Her inventions and contributions to the fin-shaped field-effect transistor design, dubbed “FinFET,” have given Dr. Liu extensive experience in emerging technologies. She also brings global and international experience to the Board with her work on establishing strategic international partnerships and agreements for UC Berkeley.

 

*

Effective after the conclusion of Intel’s 2021 Annual Stockholders’ Meeting, provided he/she is re-elected to the Board by stockholders at the meeting. For more information on committee changes, please see “Board Responsibilities and Committees” on page 34.

 

     

 

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LOGO

Other Current Public Boards:

None

Committee:

Audit and Finance (Chair)*

Skills & Expertise:

 

LOGO   LOGO   LOGO   LOGO   LOGO   LOGO
LOGO   LOGO   LOGO            

 

Gregory D. Smith

  

Age: 54        Director Since: 2017

 

Gregory D. Smith has been CFO since 2012 and Executive Vice President, Enterprise Operations since 2020 at The Boeing Company (Boeing), the world’s largest aerospace company. Mr. Smith leads Boeing’s Enterprise Operations, Finance and Strategy organization. In this expanded role, Mr. Smith manages the company’s overall financial activities, and drives operational excellence by overseeing the company’s manufacturing, operations, supply chain, quality, and program management functions. Mr. Smith is also responsible for the delivery of enterprise services across the company and oversees the company’s strengthened focus on sustainability. Additionally, Mr. Smith maintains oversight of the company’s financial performance, reporting, long-range business planning, treasury, and controller organizations, as well as investor relations. Mr. Smith also has executive responsibility for Boeing’s global financing arm, and he oversees the company’s corporate audit function, which reports directly to the board of directors. Mr. Smith previously served at Boeing as interim CEO, and CFO from December 2019 to January 2020; Executive Vice President, Corporate Development and Strategy from February 2015 to June 2017; Executive Vice President, CFO from February 2012 to February 2015; Vice President of Finance and Corporate Controller from February 2010 to February 2012; and Vice President of Financial Planning and Analysis from June 2008 to February 2010. Prior to that, he served for four years as Vice President of Global Investor Relations at Raytheon Company.




    

 

Qualifications:

Mr. Smith brings to the Board senior leadership, financial, strategic, operational, human capital, and global expertise from his experience as Executive Vice President, Enterprise Performance and Strategy of the world’s largest aerospace company. He has experience with budgeting, accounting controls, internal audit, financial forecasting, strategic financial planning and analysis, capital commitment planning, competitive analysis and benchmarking, investor relations, and M&A from his work as Boeing’s CFO. Mr. Smith also brings substantial international and business development experience to the Board from his enterprise performance and strategy role at Boeing. Mr. Smith’s portfolio also includes Boeing HorizonX, the venture capital arm of Boeing that identifies and invests in start-ups that are developing emerging technologies and businesses in markets such as cybersecurity, AI and machine learning, and autonomous systems among others. He has continuing experience in dealing with foreign governments, including on issues related to market access and the regulation of business and investment. Mr. Smith also brings operational experience to the Board, having held a number of leadership roles at Boeing in supply chain, factory operations, and program management.

 

 

*

Effective after the conclusion of Intel’s 2021 Annual Stockholders’ Meeting, provided he/she is re-elected to the Board by stockholders at the meeting. For more information on committee changes, please see “Board Responsibilities and Committees” on page 34.

 

     

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Table of Contents

    

LOGO

Other Current Public Boards:

Thermo Fisher Scientific Inc. and BHP Group

Committees:

Compensation (Chair) and M&A*

Skills & Expertise:

 

LOGO   LOGO   LOGO   LOGO   LOGO   LOGO
LOGO   LOGO   LOGO            

 

Dion J. Weisler

  

Age: 53        Director Since: 2020

 

Dion J. Weisler served as the President and CEO of HP, Inc., a computer, printer and related supplies technology company, from November 2015 until October 2019. Previously, he served at HP as Executive Vice President of the Printing and Personal Systems Group from June 2013 to November 2015 and as Senior Vice President and Managing Director, Printing and Personal Systems, Asia Pacific and Japan from January 2012 to June 2013. Prior to joining HP, he served at Lenovo Group Ltd., a technology company, from 2007 to 2011, including as Vice President and Chief Operating Officer of the Product and Mobile Internet Digital Home Groups from January 2008 to December 2011, and as Vice President and General Manager, South East Asia from 2007 to 2008. His prior experience also included management positions with Telstra Corporation Limited, a telecommunications company, and Acer Incorporated, a hardware and electronics company. Mr. Weisler holds a bachelor’s degree in applied science—computing (BASc) from Monash University in Australia. Mr. Weisler serves as a member of the board of directors of Thermo Fisher Scientific Inc. and BHP Group. Mr. Weisler served as a member of the board of directors of HP from 2015 to 2020.

 

 

Qualifications:

Mr. Weisler brings to the Board senior leadership, global and international, industry and information technology (IT), operating and manufacturing, emerging technologies, and cybersecurity experience from his more than 25 years of experience in the IT industry. From his role as the Chief Executive Officer of one of the world’s largest technology companies, Mr. Weisler also has financial expertise and extensive experience managing human capital and executing a business development and M&A strategy. Mr. Weisler also brings valuable board-level experience from his years of service on the boards of multinational companies like HP, Thermo Fisher Scientific and the BHP Group.

 

 

 

*

Effective after the conclusion of Intel’s 2021 Annual Stockholders’ Meeting, provided he/she is re-elected to the Board by stockholders at the meeting. For more information on committee changes, please see “Board Responsibilities and Committees” on page 34.

 

     

 

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LOGO

Other Current Public Boards:

PayPal Holdings, Inc.

Committees:

Audit and Finance, Corporate Governance and Nominating, and M&A (chair)*

Skills & Expertise:

 

LOGO   LOGO   LOGO   LOGO   LOGO   LOGO

 

Frank D. Yeary

  

Age: 57        Director Since: 2009

 

Frank D. Yeary has been Principal of Darwin Capital Advisors LLC, a private investment firm based in Phoenix, Arizona, since 2012. Mr. Yeary served as Co-founder and Executive Chairman of CamberView Partners, LLC, an advisory firm in San Francisco, California providing corporate governance and stockholder engagement advice to public companies, from 2012 to 2018. From 2008 to 2012, Mr. Yeary was Vice Chancellor of UC Berkeley, where he oversaw changes to the university’s financial and operating strategy. Prior to 2008, Mr. Yeary spent nearly 25 years in the finance industry, most recently as Managing Director, Global Head of Mergers and Acquisitions, and a member of the Management Committee at Citigroup Investment Banking. Mr. Yeary is a member of the board of directors of PayPal Holdings, Inc. and a number of private companies.

 

 

 

Qualifications:

Mr. Yeary’s career in investment banking brings to the Board financial strategy and global M&A expertise, including expertise in financial reporting and experience in assessing the efficacy of M&A on a global scale, and experience attracting and retaining strong senior leaders. At Darwin Capital Advisors, Mr. Yeary has evaluated, invested in and served as a board member for numerous venture stage companies, giving him first-hand experience identifying and developing business models. Mr. Yeary’s experience as Co-founder and Executive Chairman of CamberView Partners and his service on the board of PayPal provides insight into matters relating to corporate governance, stockholder engagement, and board best practices. As Vice Chancellor of a large public research university, Mr. Yeary gained extensive strategic, operational, and financial expertise.

 

*

Effective after the conclusion of Intel’s 2021 Annual Stockholders’ Meeting, provided he/she is re-elected to the Board by stockholders at the meeting. For more information on committee changes, please see “Board Responsibilities and Committees” on page 34.

 

     

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Director Skills, Experience, and Background

Intel is a large technology company engaged in research, manufacturing, and marketing on a global scale. We operate in highly competitive markets characterized by rapidly evolving technologies and exposure to business cycles. As we discuss below under “Board Responsibilities and Committees,” the Corporate Governance and Nominating Committee is responsible for assessing with the Board the appropriate skills, experience, and background that we seek in Board members in the context of our business and the existing composition of the Board. This assessment includes numerous diverse factors, such as independence; understanding of and experience in manufacturing, technology, finance, and marketing; senior leadership experience; international experience; mix of ages; and gender, racial, geographic and ethnic diversity. The Board then determines whether a nominee’s background, experience, personal characteristics, and skills will advance the Board’s goal of creating and sustaining a Board with a diversity of perspectives and viewpoints that can support and oversee the company’s complex activities. Our Board is committed to actively seeking women and minority director candidates for consideration. As set forth in our Corporate Governance Guidelines, the Corporate Governance and Nominating Committee, and the Board periodically review and assess the effectiveness of these practices for considering potential director candidates.

Listed below are the skills and experience that we consider important for our directors in light of our current business and structure. The directors’ biographies note each director’s relevant experience, qualifications, and skills relative to this list.

 

 

 

 

LOGO

 

 

 

Senior Leadership Experience

Directors who have served in senior leadership positions are important to us because they have the experience and perspective to analyze, shape, and oversee the execution of important operational and policy issues. These directors’ insights and guidance, and their ability to assess and respond to situations encountered in serving on our Board, may be enhanced by leadership experience at businesses or organizations that operated on a global scale, faced significant competition, or involved technology or other rapidly evolving business models.

 

 

 

LOGO

 

 

 

 

Global/International Experience

We are a global organization with R&D, manufacturing, assembly, and test facilities, and sales and other offices in many countries. In addition, the majority of our revenue comes from sales outside the U.S. Because of these factors, directors with global experience can provide valuable business and cultural perspective regarding many important aspects of our business.

 

 

 

LOGO

 

 

 

Industry and IT/Technical Experience

Because we design and manufacture technology, hardware, and software, education or experience in relevant technology is useful for understanding our R&D efforts, competing technologies, the products and processes we develop, our manufacturing and assembly and test operations, and the market segments in which we compete.

 

 

 

LOGO

 

 

 

Financial Expertise

Knowledge of financial markets, financing and funding operations, and accounting and financial reporting processes is also important. This experience assists our directors in understanding, advising on, and overseeing Intel’s capital structure, financing, and investing activities, as well as our financial reporting and internal controls.

 

 

 

LOGO

 

 

 

Human Capital Experience

Because the market for senior technology leaders is extremely competitive, experience attracting and retaining top talent, particularly in high-demand areas such as cloud computing, AI, graphics processing units, and autonomous driving, can be an important skill for the Board to possess. In addition, evolving our culture is critical to delivering on our growth strategy and for continuing to attract and retain top talent, so directors with experience overseeing and helping to shape an organization’s culture are a valuable asset to the Board.

 

 

 

LOGO

 

 

 

Operating and Manufacturing Experience

Because we are a leader in the design and manufacturing of advanced integrated digital technology platforms, understanding of and experience with manufacturing and other operational processes is a valuable asset to the Board.

 

 

 

LOGO

 

 

 

Sales, Marketing, and Brand Management Experience

Directors with sales, marketing, and brand management experience can provide expertise and guidance as we seek to grow sales and enhance our brand.

 

 

 

LOGO

 

 

 

Emerging Technologies and Business Models Experience

Emerging technologies and business models can rapidly disrupt even the most well-thought-out strategy, particularly for technology companies. Directors with experience identifying and developing emerging technologies and business models can be valuable assets to the Board.

 

     

 

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LOGO

 

 

 

Business Development and M&A Experience

Directors with a background in business development and M&A provide insight into developing and implementing strategies for growing our business. Useful experience in this area includes skills in assessing “make” vs. “buy” decisions, analyzing the “fit” of a proposed acquisition with a company’s strategy, valuing transactions, and assessing management’s plans for integration with existing operations.

 

 

 

LOGO

 

 

 

Cybersecurity/Information Security

Directors who have experience managing cybersecurity and information security risks or who understand the cybersecurity threat landscape can provide valuable knowledge and guidance to the Board in its oversight of the company’s cybersecurity risks.

 

 

 

LOGO

 

 

 

Government, Legal, and Regulatory Experience

Directors who have served in government positions provide experience and insights that help us work constructively with governments around the world and address significant public policy issues, particularly as they relate to Intel’s operations and to public support for science, technology, engineering, and mathematics education. Directors with a background in law can assist the Board in fulfilling its oversight responsibilities regarding Intel’s legal and regulatory compliance and its engagement with regulatory authorities.

 

 

 

LOGO

 

 

 

Public Company Board Experience

Directors with public company board experience understand the dynamics and operation of a corporate board, the relationship of a public company board to the CEO and other senior management personnel, the legal and regulatory landscape in which public companies must operate, the importance of particular agenda and oversight issues, and how to oversee an ever-changing mix of strategic, operational, and compliance-related matters.

 

 

 

LOGO

 

 

 

Background

Members representing a mix of ages, genders, races, ethnicities, geographies, cultures, and other perspectives expand the Board’s understanding of the needs and viewpoints of our customers, partners, employees, governments, stockholders, and other stakeholders worldwide.

 

     

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Board Matrix

Listed below are the skills and experience that we consider important for our director nominees in light of our current business strategy and structure. The directors’ biographies note each director’s relevant experience, qualifications, and skills relative to this list.

 

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Director Tenure

 

The Board generally believes that a mix of long- and short-tenured directors promotes an appropriate balance of views and insights and allows the Board as a whole to benefit from the historical and institutional knowledge that longer-tenured directors possess and the fresh perspectives contributed by newer directors. Our Corporate Governance Guidelines provide that, as an alternative to term limits, the Board seeks to maintain an average tenure of 10 years or less for the independent directors as a group.

 

If each independent director nominee is elected to the Board, after the 2021 Annual Stockholders’ Meeting, our independent directors will have served an average of 3.9 years on the Board. Overall, our Board, including both independent and employee directors, will have an average tenure of 3.4 years. We believe that this mix of tenure on the Board represents a diversified “portfolio” of new perspectives and deep institutional knowledge.

   LOGO

Board Diversity and Refreshment

 

Our Board is committed to building a Board with diverse experiences and backgrounds. In 2014, the Board formally adopted its commitment to actively seek women and minority candidates for the pool from which board candidates are chosen. In connection with our Board refreshment process, the Governance Committee seeks input from Intel’s head or acting head of Global Diversity and Inclusion. Representation of gender, race, ethnic, geographic, cultural, or other diverse perspectives expands the Board’s understanding of the needs and viewpoints of our customers, partners, employees, governments, and other stakeholders worldwide. As part of our ongoing commitment to creating a balanced Board with diverse viewpoints and deep industry expertise, we regularly add new directors to infuse new ideas and fresh perspectives in the boardroom.

 

Our directors reflect diverse perspectives, including a complementary mix of skills, experience, and backgrounds that we believe are paramount to our ability to represent your interests as stockholders. In the last five years, eight new independent directors have been elected or appointed to the Board, three of whom have been women. If each director nominee is elected to the Board, after the 2021 Annual Stockholders’ Meeting, the majority of the Board would be diverse based on directors’ gender, race, ethnicity, and/or nationality. Intel is committed to focusing on Board diversity more broadly through engagement with key partners. In 2018, Intel joined the Thirty Percent Coalition (Coalition), which focuses on strategies to increase female representation on corporate boards. In 2019, the Coalition added a specific focus on women of color. In 2020, the Governance Committee engaged with two search firms with ties to diverse organizations in order to source more diverse candidate pools. In addition, through our partnerships, we aim to not only increase the available talent for our Board, but to also support increased female board representation across our industry.

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Our Board is focused on achieving the right mix of skills, experience, and perspectives to support Intel’s future strategic direction, including its transformation from a CPU to a multi-architecture xPU company, from silicon to platforms, and from a traditional IDM to a new, modern IDM. For example, we have recently prioritized industry knowledge and experience in our director recruitment efforts, as reflected by the recent additions of Mr. Goetz, Ms. Henry, and Mr. Weisler to our Board. In addition, recognizing the importance of the Board’s role in overseeing human capital risks as Intel undergoes a cultural transformation, over the past few years we have also added directors with human capital management experience, including most recently Mr. Weisler.    LOGO

Board Evaluations

We are committed to providing transparency about our Board and committee evaluation process. Our Chairman of the Board leads the Board’s self-evaluation process. Each director completes a comprehensive questionnaire evaluating the performance of the Board as a whole, the committees on which the director serves, the director’s own performance, and the performance of each of the director’s peers on the Board. The directors’ responses are aggregated and anonymized to encourage the directors to respond candidly and to maintain the confidentiality of their responses. The Chairman summarizes the directors’ responses about the performance of the Board as a whole and the committees and shares his findings with the Board. The annual evaluation process provides the Board with valuable insight regarding areas where the Board believes it functions effectively and, more importantly, areas where the Board believes it can improve. For example, input generated by Board members in recent years has focused, among other things, on industry experience, which has encouraged and informed our recent Board refreshment efforts.

 

     

 

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 Corporate Governance

      
      

 

Board Leadership Structure

Chairman of the Board: Omar Ishrak

Chief Executive Officer: Patrick P. Gelsinger

Board Leadership Structure. We separate the roles of Board Chairman and CEO to aid in the Board’s oversight of management. This policy is embodied in the Board’s published Corporate Governance Guidelines, and has been in effect since the company began operations. At times, the Chairman has been a former executive of the company and has served as a full-time executive officer, as was the case with Mr. Bryant, who served as Executive Chairman until January 2020. At other times, an independent director has served as non-executive Chairman, as is the case with our current Chairman of the Board, Dr. Ishrak.

The Board believes that there are advantages to having an independent chairman, including by helping to facilitate relations between the Board, the CEO, and other senior management, assist the Board in reaching consensus on particular strategies and policies, and foster robust evaluation processes; and by efficiently allocating oversight responsibilities between the independent directors and management.

Chairman Responsibilities. Our CEO has primary responsibility for the operational leadership and strategic direction of Intel, while our Chairman facilitates our Board’s oversight of management, promotes communication between management and our Board, engages with stockholders, and leads our Board’s consideration of key governance matters. As non-executive Chairman, Dr. Ishrak’s responsibilities include:

 

  §  

presiding over all meetings of the Board;

 

  §  

developing the schedule and agenda for Board meetings in consultation with the CEO, Corporate Secretary, and other members of the Board;

 

  §  

assessing the quality, quantity, and timeliness of the information submitted by the company’s management that is necessary or appropriate for the non-employee directors to effectively and responsibly perform their duties;

 

  §  

calling and presiding over meetings of the independent directors;

 

  §  

working with the Corporate Governance and Nominating Committee to evaluate potential director candidates, determine the membership of the various Board committees, and select committee chairs;

 

  §  

managing the Board’s process for annual director self-assessment and evaluation of the Board and its committees;

 

  §  

evaluating the performance of the CEO and overseeing CEO succession planning;

 

  §  

serving as principal liaison between the Board and the CEO;

 

  §  

presiding over all meetings of stockholders; and

 

  §  

serving as the Board’s liaison for consultation and direct communication with stockholders.

The independent directors periodically assess the Board’s leadership structure and will continue to evaluate and implement the leadership structure that they conclude most effectively supports the Board in fulfilling its responsibilities.

 

     

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The Board’s Role in Risk Oversight at Intel

An important function of the Board is oversight of risk management at Intel. Risk is inherent in business, and the Board’s oversight, assessment, and decisions regarding risks occur in the context of and in conjunction with the other activities of the Board and its committees.

Defining Risk. The Board and management consider “risk” to be the possibility that an undesired event could occur that might adversely affect the achievement of our objectives. Risks vary in many ways, including the ability of the company to anticipate and understand the risk, the types of adverse impacts that could result if the undesired event occurs, the likelihood that an undesired event and a particular adverse impact would occur, and the ability of the company to control the risk and the potential adverse impacts. Examples of the types of risks faced by Intel include:

 

  §  

macro-economic risks, such as inflation, deflation, reductions in economic growth, or recession;

 

  §  

political risks, such as restrictions on access to markets, increased taxation, or expropriation of assets;

 

  §  

event risks, such as natural disasters, public health crises, or cybersecurity incidents; and

 

  §  

business-specific risks related to strategy and competition, product demand, global operations, products and manufacturing, cybersecurity and privacy, intellectual property protection and theft, litigation and regulatory compliance, corporate responsibility and sustainability (including climate risk), human capital risks, and corporate governance risks.

Not all risks can be dealt with in the same way. Some risks may be readily perceived and controllable, while other risks are unknown; some risks can be avoided or mitigated by particular behavior, and some risks are unavoidable as a practical matter. In some cases, a decision may be made that a higher degree of risk may be acceptable because of a greater perceived potential for reward. Intel seeks to align its voluntary risk-taking with company strategy, and Intel understands that its projects and processes may enhance the company’s business interests by encouraging innovation and appropriate levels of risk-taking.

 

     

 

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Risk Assessment Responsibilities and Processes

 

LOGO   The Board

The full Board has primary responsibility for risk oversight. The Board executes its oversight duties through:

 

§  Assigning specific oversight duties to the Board committees

 

§  Periodic briefing and informational sessions by management on:

 

§  The types of risks the company faces

 

§  Enterprise risk management: risk identification, mitigation, and control

  For most enterprise risk management issues, such as cybersecurity risks, the Board receives regular and detailed reports from management or the appropriate Board committee regarding its review of the issues. In some cases, such as risks regarding new technology and product acceptance, risk oversight is addressed as part of the full Board’s regular oversight of strategic planning.
                                                    
Committees as of March 9, 2020
                                                                                                                             
 
LOGO       LOGO       LOGO       LOGO
 

Audit

 

Oversees issues related to
financial reporting,
internal controls, audit
functions, and major
financial, product security,
and cybersecurity risk
exposures, and
management’s annual
enterprise risk
management assessment

     

Compensation

 

Oversees management of
risks related to the
company’s compensation
programs, including our
conclusion that our
compensation policies and
practices do not create risks
that are reasonably likely to
have a material adverse
effect on the company, and
risks related to human
capital management

     

Corporate Governance
and Nominating

 

Oversees issues related to
risks arising from the
company’s environmental,
social and governance
practices as well as
corporate responsibility and
sustainability initiatives and
performance

     

Finance

 

Oversees issues related to
financial risk management,
including the company’s risk
tolerance in cash-
management investments

 

                                         
   LOGO     Management      

Management is primarily responsible for:

§  Identifying risk and risk controls related to significant business activities

 

§  Mapping the risks to company strategy

  

§  Developing programs and recommendations to determine the sufficiency of risk identification, the balance of potential risk to potential reward, and the appropriate manner in which to manage risk

 

With respect to the risk assessment of the company’s compensation programs, management is primarily responsible for:

 

  §  

Reviewing all significant compensation programs, focusing on programs with variable payouts

 

 

  §  

Assessing the company’s executive and broad-based compensation and benefits programs to determine whether the programs’ provisions and operation create undesired or unintentional material risk. The risk assessment process:

 

 

  §  

Includes a review of compensation program policies and practices, risk identification and control procedures, the balance of risk to reward, and the significance and risks posed by compensation programs on the company’s overall strategy

 

 

  §  

Takes into account compensation terms and practices that aid in controlling risk, including the compensation mix, payment periods, claw-back provisions, and stock ownership guidelines

 

 

 

     

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Director Independence and Transactions Considered in Independence Determinations

Director Independence. The Board has determined that each of the following non-employee directors qualifies as “independent” in accordance with the published listing requirements of Nasdaq: Mr. Goetz, Ms. Henry, Dr. Ishrak, Dr. Lavizzo-Mourey, Dr. Liu, Mr. Smith, Mr. Weisler, Mr. Wilson (who is not standing for re-election), and Mr. Yeary. Because Mr. Gelsinger is employed by Intel, he does not qualify as independent. Messrs. Bryant and Swan, who served as directors until May 2020 and February 2021, respectively, did not qualify as independent because of their employment by Intel.

The Nasdaq rules have objective tests and a subjective test for determining who is an “independent director.” Under the objective tests, a director cannot be considered independent if:

 

  §  

The director is, or at any time during the past three years was, an employee of the company;

 

  §  

The director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for Board or Board committee service);

 

  §  

A family member of the director is, or at any time during the past three years was, an executive officer of the company;

 

  §  

The director or a family member of the director is a partner in, a controlling stockholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceeded 5% of the recipient’s consolidated gross revenue for that year, or $200,000, whichever was greater (subject to certain exclusions);

 

  §  

The director or a family member of the director is employed as an executive officer of an entity for which at any time during the past three years any of the executive officers of the company served on the compensation committee of such other entity; or

 

  §  

The director or a family member of the director is a current partner of the company’s outside auditor, or at any time during the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit.

The subjective test states that an independent director must be a person who lacks a relationship that, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Board has not established categorical standards or guidelines to make these subjective determinations, but considers all relevant facts and circumstances.

In addition to the Board-level standards for director independence, the directors who serve on the Audit Committee each satisfy standards established by the U.S. Securities and Exchange Commission (SEC) and Nasdaq, as no member of the Audit Committee accepts directly or indirectly any consulting, advisory, or other compensatory fee from the company other than their director compensation, or otherwise has an affiliate relationship with the company. Similarly, the members of the Compensation Committee each qualify as independent under SEC and Nasdaq standards. Under these standards, the Board considered that none of the members of the Compensation Committee accept directly or indirectly any consulting, advisory, or other compensatory fee from the company other than their director compensation, and that none have any affiliate relationships with the company or other relationships that would impair the director’s judgment as a member of the Compensation Committee.

Transactions Considered in Independence Determinations. In making its subjective determination that each non-employee director is independent, the Board reviewed and discussed additional information provided by the directors and the company with regard to each director’s business and personal activities as they may relate to Intel and Intel’s management and considered transactions that occurred since the beginning of 2018 between Intel and entities associated with the independent directors or members of their immediate families. The Board considered the transactions in the context of the Nasdaq objective standards and the special standards established by the SEC and Nasdaq for members of audit and compensation committees. Based on this review, as required by the Nasdaq rules, the Board made a subjective determination that, based on the nature of the directors’ relationships with the entity and/or the amount involved, no relationships exist that, in the opinion of the Board, impair the directors’ independence. The Board’s independence determinations took into account the following transactions:

Business Relationships. Each of our non-employee directors (or one of his or her immediate family members) is, or was during the previous three fiscal years, a non-management director, trustee, advisor, or executive or served in a similar position at another entity that did business with Intel at some time during those years. The business relationships were ordinary course dealings as a supplier or purchaser of goods or services; licensing or research arrangements; facility, engineering, and equipment fees; or commercial paper or similar financing arrangements in which Intel or an affiliate participated as a creditor. Payments to or from

 

     

 

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each of these entities constituted less than the greater of $200,000 or 1% of each of Intel’s and the recipient’s annual revenue, respectively, in each of the past three years; there were no exceptions for the above-referenced time period.

Charitable Contributions. Dr. Lavizzo-Mourey, Dr. Liu, or one of their immediate family members is serving, or has each served during the previous three fiscal years, as an executive, professor, or other employee for one or more colleges or universities or as a director, executive, or employee of a charitable entity that received matching or other charitable contributions from Intel during those years. Charitable contributions to each of these entities (including matching and discretionary contributions by Intel and the Intel Foundation) constituted less than the greater of $120,000 or 1% of the recipient’s annual revenues in each of the past three years, as discussed below.

 

  §  

Dr. Liu is Dean and Roy W. Carlson Professor of Engineering in the College of Engineering at UC Berkeley. The Intel Foundation contributed less than $59,500 in each of the past three years to match Intel employee charitable contributions to UC Berkeley, amounting to less than 0.003% of UC Berkeley’s consolidated annual revenue for each of the past three years.

 

  §  

Dr. Lavizzo-Mourey retired in January 2021 after serving as the Robert Wood Johnson Foundation PIK Professor of Population Health and Health Equity at the University of Pennsylvania. The Intel Foundation contributed less than $14,300 in each of the past three years to match Intel employee charitable contributions to the University of Pennsylvania, amounting to less than 0.0001% of the University of Pennsylvania’s consolidated annual revenue for each of the past three years.

 

  §  

Dr. Lavizzo-Mourey is a member of the Board of Regents of the Smithsonian Institution. The Intel Foundation contributed less than $9,400 in each of the past three years to match Intel employee charitable contributions to the Smithsonian Institution, amounting to less than 0.01% of the Smithsonian Institution’s consolidated annual revenue for each of the past three years, and in 2019, Intel entered into a sponsorship agreement with the Smithsonian Institution, amounting to less than 0.78% of the Smithsonian Institution’s consolidated annual revenue for 2019.

 

     

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Corporate Governance Guidelines

Intel has long maintained a set of Corporate Governance Guidelines. The Corporate Governance and Nominating Committee reviews the guidelines periodically and recommends amendments to the Board as appropriate. The Board oversees administration and interpretation of, and compliance with, the guidelines and may amend, waive, suspend, or repeal any of the guidelines at any time, with or without public notice subject to legal requirements, as it determines necessary or appropriate in the exercise of the Board’s judgment in its role as fiduciary.

These guidelines, which investors may find on our website at www.intel.com/governance, along with our other corporate governance practices, compare favorably under the Investor Stewardship Group’s (ISG) Corporate Governance Framework for U.S. Listed Companies, as shown in the table below.

 

   
ISG Principle   Intel Practice
 

Principle 1

Boards are accountable to stockholders

 

§  All directors are elected annually

 

§  Majority voting in uncontested director elections

 

§  Proxy access with market terms (3% for three years, up to 20% of the Board)

 

§  Annual Chairman’s letter in proxy statement that describes the Board’s activities over the past year

 

 

Principle 2

Stockholders should be entitled to voting rights in proportion to their economic interest

 

 

§  No dual-class share structure

 

§   Each stockholder is entitled to one vote per share

 

 

Principle 3

Boards should be responsive to stockholders and be proactive in order to understand their perspectives

 

§  Chairman met with investors owning almost 30% of shares outstanding in 2020

 

§  Engagement topics included strategy, culture and human capital management; issues concerning ESG matters; executive compensation; and stockholder proposals

 

§  The Board has made a number of changes in response to investor feedback, including:

 

§  adding additional industry experience to the Board;

 

§  enhancing further the integration of ESG disclosure into our Form 10-K, proxy statement, and Corporate Responsibility Report;

 

§  working on aligning human capital and climate risk disclosures with external frameworks;

 

§  adding three-year EPS as a performance metric for performance-based RSUs; and

 

§  proactively lowering the stockholder special meeting threshold to 15% from 25%

 

 

Principle 4

Boards should have a strong, independent leadership structure

 

§  Independent Chairman, separate from CEO

 

§   Board considers appropriateness of its leadership structure at least annually

 

§   Independent committee chairs

 

§   Independent directors meet in executive session at least three times per year

 

 

Principle 5

Boards should adopt structures and practices that enhance their effectiveness

 

§  89% of the director nominees are independent

 

§   33% of the director nominees are ethnically diverse, 33% of the director nominees are gender diverse, and we have a policy of seeking out women and minority candidates, as well as candidates with diverse backgrounds, experiences, and skills, as part of each Board search

 

§   Annual Board and committee self-evaluations, as well as self- and peer-assessments

 

§   Active Board refreshment, with eight new directors joining since 2017, and seek to cap average director tenure at 10 years

 

§   Limits on outside boards, with no director permitted to serve on more than four public company boards (including Intel)

 

§   No restrictions on directors’ access to management or employees

 

§   No independent director is expected to stand for re-election after age 75 without prior Board approval

 

 

Principle 6

Boards should develop management incentive structures that are aligned with the long-term strategy of the company

 

 

§  Compensation Committee annually reviews and approves incentive program design, goals, and objectives for alignment with compensation and business strategies

 

§  Annual and long-term incentive programs are designed to reward financial and operational performance that furthers short- and long-term strategic objectives

 

 

     

 

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Director Attendance

The Board held six regularly scheduled meetings and ten special meetings in 2020. As shown in the Board Committee chart below, standing committees of the Board collectively held a total of 44 meetings during 2020, with each committee holding a number of regularly scheduled and special meetings. We expect each director to attend every meeting of the Board and the committees on which he or she serves. Each director attended at least 75% of the meetings of the Board and each committee on which he or she served in 2020 (held during the period in which the director served), and on average directors attended 96% of Board and committee meetings. The Board’s policy is that directors should endeavor to attend the annual stockholders’ meeting, and eight out of 10 of the then-incumbent directors attended the 2020 Annual Stockholders’ Meeting.

Board Responsibilities and Committees

Board Responsibilities. The Board oversees, counsels, and directs management in the long-term interests of the company and our stockholders. The Board’s responsibilities include:

 

  §  

overseeing the conduct of our business and the assessment of our business and other enterprise risks to evaluate whether the business is being properly managed;

 

  §  

planning for CEO succession and monitoring management’s succession planning for other senior executives;

 

  §  

reviewing and approving our major financial objectives, strategy, operating plans, and other significant actions;

 

  §  

selecting the CEO, evaluating CEO performance, and determining the compensation of the CEO and other executive officers; and

 

  §  

overseeing our processes for maintaining the integrity of our financial statements and other public disclosures, and our compliance with law and ethics.

The Board and its committees met throughout the year on a set schedule, held special meetings, and acted by written consent from time to time as necessary. At each regular Board meeting, time is reserved for the independent directors to meet in executive session without the CEO present. Officers regularly attend Board meetings to present information on our business and strategy, and Board members have access to our employees outside of Board meetings. Board members are encouraged to make site visits on a worldwide basis to meet with local management; to attend Intel industry, analyst, and other major events; and to accept invitations to attend and speak at internal Intel meetings. In 2020, due to COVID-19 restrictions, the majority of activities were conducted virtually.

The Board’s Role in Succession Planning. As reflected in our Corporate Governance Guidelines, the Board’s primary responsibilities include planning for CEO succession and monitoring management’s succession planning for other senior executives. The Board’s goal is to have a long-term and continuing program for effective senior leadership development and succession. For more information regarding our Leadership Transformation decisions, please see “Compensation Discussion and Analysis; Executive Summary; Leadership Transformation” on page 66.

Board Committees. The Board assigns responsibilities and delegates authority to its committees, and the committees regularly report on their activities and actions to the full Board. For 2020, the Board had five standing committees: Audit, Compensation, Corporate Governance and Nominating, Executive, and Finance. Each committee could engage outside experts, advisors, and counsel to assist the committee in its work.

Each committee has a written charter approved by the Board. We post each charter in the Corporate Governance section of our website at www.intc.com/board-and-governance.

 

     

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The following table identifies the current committee members as of March 9, 2021. As discussed above, the Board has determined that each member of the Audit, Compensation, and Corporate Governance and Nominating Committees is an independent director in accordance with Nasdaq standards.

 

                                              Board Committee Members as of March 9, 2021

 

Name

 

 

    Audit         Compensation    

Corporate

Governance
and

    Nominating    

    Executive         Finance    

Patrick P. Gelsinger

James J. Goetz

Alyssa Henry

Omar Ishrak*

§

Risa Lavizzo-Mourey

§

Tsu-Jae King Liu

§

Gregory D. Smith

§

Dion J. Weisler

Andrew Wilson

§

Frank D. Yeary

Number of Committee Meetings Held in 2020

15

10

12

1

6

 

*

 

Chairman of the Board

§

 

Committee Chair

 

Member

Audit Committee

Membership as of March 9, 2021: Gregory D. Smith (Chair), Alyssa Henry, Tsu-Jae King Liu, and Frank D. Yeary

 

  §  

Assists the Board in its general oversight of our financial reporting, internal controls, and audit functions.

 

  §  

Appoints and retains our independent registered public accounting firm, managing its compensation, and overseeing its work.

 

  §  

Reviews and discusses with management our major financial, product security, and cybersecurity risk exposures and the steps management has taken to monitor and control such exposures; and our annual enterprise risk management assessment.

 

  §  

Receives periodic reports from the Global Director of Ethics and Legal Compliance, no less than annually, on the operation and effectiveness of our corporate compliance program.

 

  §  

Oversees compliance with our Code of Conduct.

During the past year, the Audit Committee’s oversight focused on, among other things, key financial reporting and disclosure matters, critical accounting estimates, ethical and legal compliance, and enterprise risk management, including cybersecurity and product security. The Board has determined that Mr. Yeary and Mr. Smith each qualify as an “audit committee financial expert” under SEC rules and that each Audit Committee member is sufficiently proficient in reading and understanding the company’s financial statements to serve on the Audit Committee. The responsibilities and activities of the Audit Committee are described in detail in “Report of the Audit Committee” in this proxy statement and the Audit Committee’s charter.

Compensation Committee

Membership as of March 9, 2021: Andrew Wilson (Chair), Alyssa Henry, Omar Ishrak, Risa Lavizzo-Mourey, and Dion J. Weisler

 

  §  

Reviews, recommends, and approves salaries, bonuses, and other matters related to the compensation of our executive officers.

 

  §  

Reviews and approves the performance measures and goals for our executive officers.

 

  §  

Reviews and grants equity awards to our executive officers.

 

  §  

Reviews and determines other compensation policies, handles many compensation-related matters, and makes recommendations to the Board and to management on employee compensation and benefit plans.

 

  §  

Administers Intel’s equity incentive plans.

 

     

 

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  §  

Reviews Intel’s programs and practices related to executive workforce diversity and the administration of executive compensation programs in a non-discriminatory manner.

 

  §  

Oversees the company’s strategies, initiatives, and programs with respect to the company’s culture; talent recruitment, development and retention; employee engagement, diversity, and inclusion; and management development and succession planning for the company’s CEO and selected senior leaders.

During the past year, the Compensation Committee’s oversight focused on, among other things, compensation program strategy and design, human capital management and COVID-19 pandemic response, succession planning, and leadership development. The Compensation Committee is responsible for determining compensation for Intel executives (including our CEO), while the Corporate Governance and Nominating Committee recommends to the full Board the compensation for non-employee directors. The Compensation Committee can designate one or more of its members to perform duties on its behalf, subject to reporting to or ratification by the Compensation Committee, and can delegate to other Board members, or an officer or officers of the company, the authority to review and grant stock-based compensation for employees who are not executive officers.

The Compensation Committee has engaged Compensia as its independent executive compensation consultant. The consultant provides input, analysis, and advice about Intel’s executive compensation philosophy, peer groups, pay positioning (by pay component and in total) relative to peer companies, compensation design, equity usage and allocation, and risk assessment under Intel’s compensation programs. The consultant reports directly to the Compensation Committee and interacts with management at the committee’s direction. Compensia did not perform work for Intel in 2020 except under its engagement by the Compensation Committee. The Compensation Committee assessed its consultant under factors set forth in the SEC’s rules and concluded that Compensia was independent, and that the firm’s work in 2020 for the Compensation Committee did not raise any conflicts of interest.

The CEO makes recommendations to the Compensation Committee on the base salary, annual incentive cash targets, and equity awards for all executive officers other than himself. These recommendations are based on his assessment of each executive officer’s performance during the year and his review of, among other things, compensation surveys, competitive market data, and criticality of each role. For more information on the responsibilities and activities of the Compensation Committee, including the processes for determining executive compensation, see “Compensation Discussion and Analysis,” “Report of the Compensation Committee,” and “Executive Compensation” in this proxy statement, and the Compensation Committee’s charter (available at www.intc.com/board-and-governance/governance-documents).

Throughout the COVID-19 pandemic, the Compensation Committee received regular updates from management on the company’s pandemic response as we continued to deliver for customers and play an important role in the unanticipated volume of “work from home.” The Compensation Committee closely monitored the company’s efforts to protect the health and well-being of its 110,000 employees around the world and the communities in which the company operates.

Corporate Governance and Nominating Committee

Membership as of March 9, 2021: Dr. Risa Lavizzo-Mourey (Chair), James Goetz, Dr. Omar Ishrak, and Frank D. Yeary

 

  §  

Identifies, evaluates, and recruits individuals to become Board members.

 

  §  

Reviews matters of corporate governance, corporate responsibility and sustainability performance, such as environmental, sustainability, climate risk, human capital, political contributions, and stakeholder issues, and periodically reports on these matters to the Board.

 

  §  

Periodically reviews and assesses the effectiveness of the Board’s Corporate Governance Guidelines, recommends to the Board proposed revisions to the Guidelines and committee charters, and reviews the poison pill policy.

 

  §  

Makes recommendations to the Board regarding the size and composition of the Board and its committees.

 

  §  

Reviews stockholder proposals and recommends actions on such proposals.

 

  §  

Advises the Board on compensation for our non-employee directors.

 

  §  

Periodically reviews and assesses our stockholder engagement process, and reviews and reports stockholder feedback to the Board and works with the Board and management to address.

During the past year, the Corporate Governance and Nominating Committee’s oversight focused on, among other things, Board composition and disclosure, director recruitment, Intel’s Corporate Responsibility Report and trends (including environmental sustainability, climate risk, human capital, human rights issues, and political accountability), and investor outreach and feedback. The Corporate Governance and Nominating Committee also establishes procedures for Board nominations and recommends

 

     

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candidates for election to the Board. Consideration of new Board candidates typically involves a series of internal discussions, review of candidate information, and interviews with selected candidates. Board members typically suggest candidates for nomination to the Board and the Corporate Governance and Nominating Committee also retains third-party search firms to identify candidates. In addition to candidates identified by Board members, the committee considers candidates proposed by stockholders and evaluates them using the same criteria. A stockholder who wishes to suggest a candidate for the committee’s consideration should send the candidate’s name and qualifications to our Corporate Secretary. The Corporate Secretary’s contact information can be found in this proxy statement under the heading “Other Matters; Communicating with Us.” During 2020, the Board retained and paid fees to a third-party search firms to assist the Corporate Governance and Nominating Committee in the processes of identifying and evaluating potential Board candidates, consistent with the committee’s criteria. The Corporate Governance and Nominating Committee specifically requested that the search firms work with organizations focused on sourcing candidates of different races, ethnicities, genders, and sexual orientations. Our new director nominee, Dion J. Weisler was initially recommended to the Corporate Governance and Nominating Committee by a current director.

In screening director candidates, regardless of whether they are identified by current Board members, stockholders, or third-party search firms, the committee considers the diversity of skills, experience, and background of the Board as a whole and, based on that analysis, determines whether it would strengthen the Board to add a director with a certain type of background, experience, personal characteristics, or skills. For additional information regarding what factors the committee considers in evaluating director candidates, see “Director Skills, Experience, and Background” above on page 23.

Executive Committee

Membership as of March 9, 2021: Omar Ishrak (Chair), Patrick P. Gelsinger, Gregory D. Smith and Frank D. Yeary

 

  §  

Exercises the authority of the Board between Board meetings, except as limited by applicable law.

Finance Committee

Membership as of March 9, 2021: Tsu-Jae King Liu (Chair), James Goetz, Gregory D. Smith, Dion J. Weisler and Andrew Wilson

 

  §  

Assist the Board in its oversight of global treasury activities; derivatives transactions; financial risk management; off-balance sheet arrangements; mergers, acquisitions, divestitures and strategic investments; capital structure and capital allocation strategy; financing requirements; capital expenditures; dividends; stock repurchase authorizations; investor relations activities; insurance and self-insurance programs; and retirement plans.

 

  §  

Annually reviews and approves on behalf of the company and its subsidiaries the company’s decisions to enter into swaps that are exempt from mandatory exchange execution and clearing pursuant to the Commodity Exchange Act “end-user” and “treasury affiliate” exceptions.

Overview of Committee Changes for 2021

In order to further enhance the Board’s efficiency and productivity, and to provide for more focused oversight of the Company’s activities in areas that are critical to the Company’s strategic priorities, on March 10, 2021, the Board restructured its committees. Specifically, the Board eliminated the Executive Committee, combined the Finance and Audit Committees into the Audit & Finance Committee, and created a new M&A Committee. In addition, three new advisory committees were created – the Technology Advisory Committee, the Government Affairs Advisory Committee, and the Architecture Advisory Committee, which will include Board members and outside experts to provide a stronger “outside-in” perspective to the Board and management in key strategic areas. The description of the membership and responsibilities of the Audit & Finance Committee and the M&A Committee are discussed below. No changes were made to either the responsibilities or composition of the Compensation Committee or the Corporate Governance and Nominating Committee.

Audit and Finance Committee

Membership as of March 10, 2021: Gregory D. Smith (Chair), Alyssa Henry, Tsu-Jae King Liu, and Frank D. Yeary

 

  §  

Assists the Board in its general oversight of our financial reporting, internal controls, and audit functions.

 

  §  

Appoints and retains our independent registered public accounting firm, managing its compensation, and overseeing its work.

 

  §  

Reviews and discusses with management our major financial, product security, and cybersecurity risk exposures and the steps management has taken to monitor and control such exposures; and our annual enterprise risk management assessment.

 

  §  

Receives periodic reports from the Global Director of Ethics and Legal Compliance, no less than annually, on the operation and effectiveness of our corporate compliance program.

 

     

 

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  §  

Oversees compliance with our Code of Conduct.

 

  §  

Assists the Board in its oversight of global treasury activities; derivatives transactions; financial risk management; off-balance sheet arrangements; capital structure and capital allocation strategy; financing requirements; capital expenditures; dividends; stock repurchase authorizations; investor relations activities; insurance and self-insurance programs; and retirement plans.

 

  §  

Annually reviews and approves on behalf of the company and its subsidiaries the company’s decisions to enter into swaps that are exempt from mandatory exchange execution and clearing pursuant to the Commodity Exchange Act “end-user” and “treasury affiliate” exceptions.

M&A Committee

Membership as of March 10, 2021: Frank D. Yeary (Chair), James Goetz, Alyssa Henry, and Dion J. Weisler

 

  §  

Reviews and provides guidance to management and the Board with respect to our equity investments, acquisitions, and divestiture strategies.

 

  §  

Reviews with management when and as the committee deems appropriate the material terms of any proposed equity investment, acquisition, divestiture, and other transactions including, but not limited to, joint ventures and strategic alliances (individually, a Transaction), including how such Transaction fits with our strategic plans, and the Transaction strategy, timing, important milestones, financing, key risks and opportunities and integration plan and recommends Transactions to the Board as the committee deems appropriate.

 

  §  

In connection with such reviews, the committee has the authority to review, assess, and approve any Transaction involving the company or any of its affiliates up to a specified dollar limit and in accordance with any other applicable parameters established by the Board.

 

  §  

Reviews and discusses with management any Transaction which requires approval of the full Board.

 

  §  

At least annually, reviews and evaluates the strategic, financial performance, execution, and integration of our completed Transactions, including relative to information presented by management in connection with the approval of such Transaction and our strategic objectives.

 

  §  

Maintains familiarity with the status of our Transaction pipeline as a whole and periodically reviews with management the ecosystem for Transactions generally.

 

  §  

At management’s request, provides support and guidance with respect to the presentation of Transactions to the Board.

 

  §  

Keeps apprised of potential unique or extraordinary strategic alternatives and advises the Board as appropriate.

 

  §  

Provides to the full Board on a regular basis a report on the committee’s activities.

 

     

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The following table identifies the expected current committee members following the annual stockholders’ meeting on May 13, 2021. The Board has determined that each member of the Audit and Finance, and M&A Committees is an independent director in accordance with Nasdaq standards.

Board Committee Members Effective as of May 13, 2021

 

Name

    Audit and    

Finance

    Compensation    

Corporate
Governance
and

    Nominating    

Mergers &

    Acquisitions    

Patrick P. Gelsinger

James J. Goetz

Alyssa Henry

Omar Ishrak*

Risa Lavizzo-Mourey

§

Tsu-Jae King Liu

Gregory D. Smith

§

Dion J. Weisler

§

 

Frank D. Yeary

§

 

*

 

Chairman of the Board

§

 

Committee Chair

 

Member

 

 

 

 

 

Effective after the conclusion of Intel’s 2021 Annual Stockholders’ Meeting, provided he is re-elected to the Board by stockholders at the meeting, Mr. Weisler will be chair of the Compensation Committee.

 

     

 

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 Investor Engagement

      
      

 

Stockholder Engagement

Our relationship with our stockholders is an important part of our company’s success and we have a long tradition of engaging with our stockholders and obtaining their perspectives. During 2020, we continued our extensive outreach efforts, and our integrated outreach team led by our Investor Relations group, Corporate Responsibility office, Human Resources office, and Corporate Secretary office, met to discuss a wide variety of issues with investors representing an aggregate of almost 40% of our outstanding shares and our Board Chairman engaged with investors representing an aggregate of almost 30% of our outstanding shares. We believe that our approach to engaging openly with our investors on topics such as strategy, corporate governance, executive compensation, and corporate responsibility drives increased corporate accountability, improves decision making, and ultimately creates long-term value. We are committed to:

 

  §  

Accountability. Drive and support leading corporate governance and board practices to promote oversight, accountability, and good decision making.

 

  §  

Transparency. Maintain high levels of transparency on a range of financial, governance, and corporate responsibility issues to build trust and sustain two-way dialogue that supports our business success.

 

  §  

Engagement. Proactively engage with stockholders and stakeholder groups in dialogue on a range of topics to identify emerging trends and issues to inform our thinking and approach.

In addition to our regular integrated outreach team engagements, we hold a series of meetings every year with many of our institutional stockholders focused on environmental, social, and governance performance and disclosure. We pursue multiple avenues for stockholder engagement, including video and teleconference meetings with our stockholders, participating at various conferences, and issuing periodic reports on our activities. Through these activities, we discuss and receive input, provide additional information, and address questions on our corporate strategy, executive compensation programs, corporate governance, and other topics of interest to our stockholders, such as our corporate responsibility activities discussed below. These engagement efforts with our stockholders allow us to better understand our stockholders’ priorities and perspectives, and provide us with useful input concerning our corporate strategy and our compensation and corporate governance practices. We actively engage with our stockholders on a year-round basis and integrate the information we learn through these activities into our governance calendar, as reflected below.

INVESTOR ENGAGEMENT CYCLE

 

 

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The feedback we receive from stockholders and stakeholder groups through these activities is communicated to the Corporate Governance and Nominating Committee and the Compensation Committee on a regular basis throughout the year, and to our full Board once a year. After careful review, our Corporate Governance and Nominating Committee recommends to the Board whether enhancements to our company’s policies and practices are required to meet stockholder expectations relating to new issues or emerging trends.

 

     

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Who We Met With

 

50.4%    39.5%    29.7%

of shares contacted for

engagement

  

of shares engaged

with overall

  

of shares engaged by

Chairman of the Board

 

LOGO    LOGO    LOGO

Below is a summary of the feedback we received through our 2020 investor engagement program and how we responded.

 

   
What We Heard From
Investors
  Our Perspective / How We Responded
 

Board composition: would like to see more disclosure around our priorities for future director recruitment and would like to see more relevant industry experience on our board

 

§  Over the past year, we continued our Board refreshment process by adding three new independent directors to the Board (Ms. Henry and Messrs. Goetz and Weisler), each of whom brings valuable industry and other experience aligned with our strategic transformation

 

§   In 2014, we formally adopted the Rooney Rule (including diverse candidates in the pool as part of each Board search) to promote diversity and remain committed to maintaining gender, ethnic, geographic, cultural, and other diverse perspectives on our Board

 

§  In 2018, Intel joined the Thirty Percent Coalition (Coalition), which focuses on strategies to increase female representation on corporate boards, and since 2019, includes a specific focus on women of color

 

§   We provide substantial disclosure around the composition of our current Board and the skill sets we consider important for our directors to have as well as our process for identifying and evaluating potential director candidates

 

§  In 2020, we have added more information to our proxy statement about our priorities for future director recruitment, which includes ESG oversight experience and diversity (see “Board Diversity and Refreshment” on page 26)

 

ESG disclosure and governance: continue to view our ESG disclosures as best-in-class, but would like to see more disclosure around how our board oversees ESG, including with respect to human capital management and culture

 

§  We have worked, and are continuing to work, to integrate our ESG and SEC reporting and align our ESG disclosures with external frameworks such as SASB and TCFD

 

§  In 2003, we established formal board-level oversight responsibility for corporate responsibility. Our independent Corporate Governance and Nominating Committee is primarily responsible for these matters, with additional environmental, social and governance matters reviewed by other committees (e.g. the Compensation Committee is responsible for oversight of human capital issues and the Audit Committee is responsible for oversight of our corporate ethics and compliance program)

 

§   In 2020, we added more information to our proxy statement about our Board processes for overseeing ESG (see “Corporate Responsibility/ESG” on page 43) and to our Corporate Responsibility Report about the connection between our ESG program and our strategy and value creation

 

Specific ESG topics: would like to learn more about our new 2030 RISE goals and see more information about how we manage climate and water risks; human capital, pay equity and inclusion; and technology-related ethics and human rights issues

 

§  We are working to evaluate emerging issues related to technology and developing appropriate management and oversight processes

 

§  Based on investor feedback, this year we added more information to our Annual Report on Form 10-K and in this proxy statement (see “Corporate Responsibility/ESG” on page 43) on our new 2030 RISE strategy and goals, including our climate change strategy and human capital management topics such as diversity, inclusion, and social equity. We will also provide more information in our Corporate Responsibility Report to be published later in 2021 on our goals and progress made in the first year since adoption as well as our approach to human rights

 

     

 

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What We Heard From
Investors
  Our Perspective / How We Responded
 

ESG and pay: would like to see more disclosure around how we integrate ESG into our compensation programs

 

§  We are committed to corporate responsibility and sustainability and, as part of that commitment, since 2008 we have linked a portion of employee and executive pay to corporate responsibility factors

 

§   In 2020, we added more information to our proxy statement about this linkage, including explaining how these goals factor into compensation decisions and identifying the ESG goals we use for our executives (see “Annual Incentive Cash Compensation” on page 77)

 

§  For 2020, we incorporated specific carbon emissions and water use goals, as well as workforce diversity and inclusion goals related to our hiring practices, into our annual bonus program (see “Annual Incentive Cash Compensation” on page 77)

For a discussion of additional feedback we received on our executive compensation program,
see “Investor Engagement and the 2020 ‘Say on Pay’ Vote” on page 70

Communications from Stockholders to Directors

The Board recommends that stockholders initiate communications with the Board, the Chairman, or any Board committee by writing to our Corporate Secretary. You can find the address in the “Other Matters” section of this proxy statement. This process assists the Board in reviewing and responding to stockholder communications. The Board has instructed our Corporate Secretary to review correspondence directed to the Board and, at the Corporate Secretary’s discretion, to forward items that she deems to be appropriate for the Board’s consideration.

 

     

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 Corporate Responsibility / ESG

      
      

 

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Our commitment to corporate responsibility and sustainability—built on a strong foundation of transparency, governance, and ethics—creates value for Intel and our stockholders by helping us mitigate risks, reduce costs, build brand value, and identify new market opportunities. We set ambitious goals for our company and make strategic investments to advance progress in the areas of environmental sustainability, supply chain responsibility, diversity and inclusion, and social impact that benefit the environment and society. Through our technology, we enable more people to harness the power of data to help address society’s most complex issues—from climate change and energy efficiency, to economic empowerment and human rights.

We established formal Board-level oversight responsibility for corporate responsibility in 2003 and, since 2008, have linked a portion of employee and executive pay to corporate responsibility factors. In 2020, we achieved an important milestone in our journey when we reviewed our performance under our 2020 corporate responsibility goals and launched new goals and aspirations for the next decade. We created our RISE strategy and established our 2030 corporate responsibility goals (2030 goals), through which we aim to leverage our leadership position in the global technology ecosystem to create a more responsible, inclusive, and sustainable world, enabled through our technology and the expertise and passion of our employees. Our RISE strategy and 2030 goals are deeply rooted in our corporate purpose and aligned with our business strategy to enable us to create value for our customers, investors, employees, and other stakeholders over the next decade and beyond. Details on the results of our 2020 corporate responsibility goals and more information on our new 2030 goals are included in our Corporate Responsibility Report.1

A foundational element of our approach to corporate responsibility is our commitment to transparency, and we regularly evaluate the effectiveness of our reporting on our ESG reporting based on review of external reporting frameworks and direct feedback from our stockholders and other stakeholders. For more information on how our focus on corporate responsibility creates value for Intel and our stockholders, see the ”Our Capital” section on page 44 and in our 2020 Annual Report on Form 10-K, as well as our most recent Corporate Responsibility Report.1

 

1 

The contents of our Corporate Responsibility Report are referenced for general information only and are not incorporated by reference in this proxy statement.

 

     

 

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 Our Capital

      
      

 

In line with the International Integrated Reporting Council’s six capitals concept, we have outlined how we deploy various forms of capital to execute our strategy in a way that seeks to reflect our corporate values, help our customers succeed, and create value for our stakeholders.

 

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Financial Capital

Our financial capital allocation strategy focuses on building stockholder value. We have returned 95% of free cash flow to investors over the past five years.

Cash from Operating Activities $B

 

 

 

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Our Financial Capital Allocation Decisions Are Driven by Three Priorities

 

   
 Invest in the Business    Acquire and Integrate    Return Cash to Stockholders
Our first allocation priority is to invest in R&D and capital spending to strengthen our competitive position. We are efficiently maintaining our R&D investment as a percentage of revenue and continue to make significant capital investments, increasing our 14nm and 10nm wafer capacity. We also invested in 7nm and future process development. In addition to our own manufacturing capacity, we continue to use third-party foundries to expand the ways we can support our customers.   Our second allocation priority is to invest in companies around the world that will complement our strategic objectives and stimulate growth of data-centric opportunities. We look for acquisitions that leverage and strengthen our capital and R&D investments. In 2020, we completed various acquisitions to expand our product offerings and the markets we serve. Those acquisitions included Moovit, which accelerates our MaaS offering and brings Mobileye closer to achieving our plan to become a complete mobility provider, including robotaxi services. We take action when investments do not meet our criteria, and in 2020 we divested the majority of our Home Gateway Platform division and signed an agreement to divest our NAND memory business.   Our third allocation priority is to return cash to stockholders. We achieve this through our dividend and share repurchase programs. In March, we suspended stock repurchases in light of the COVID-19 pandemic and in August we entered into $10.0 billion in ASR agreements in response to our belief that our stock was trading below its intrinsic valuation at that time. In Q1 2021, we intend to complete the remaining $2.4 billion of our $20.0 billion planned repurchases announced in October 2019. During 2020, we paid $5.6 billion in dividends and repurchased $14.2 billion in shares. Our approach has reduced diluted shares outstanding over time.

 

  Dividends Per Share         Diluted Shares
Outstanding

(In Millions)

                  
 

2020

  

$1.32

   

 

 

5%

 CAGR 

 

4,232

 

2019

  

$1.26

   

 

 

4,473

   

2018

  

$1.20

   

 

 

4,701

              

 

 

This section is reproduced from our 2020 Annual Report on Form 10-K and speaks as of January 22, 2021.

1 

See “Non-GAAP Financial Measures” in Appendix A.

 

     

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R&D and Capital Investments $B

      

Acquisitions

      

Cash to Stockholders $B

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Intellectual Capital

Research and Development

R&D investment is critical for enabling us to deliver a predictable cadence of leadership products and extend our reach to accelerate our growth. Successful R&D efforts can lead to new products and technologies or improvements to existing ones, which we seek to protect through our IP rights. We may augment our R&D initiatives by acquiring or investing in companies, entering into R&D agreements, and directly purchasing or licensing technology.

Areas Key to Product Leadership

Every year we make significant investments in R&D and we have intensified our focus on areas key to product leadership. Our objective is to improve user experiences and value through advances in performance, power, cost, connectivity, security, form factor, and other features with each new generation of products. We are also focused on reducing our design complexity, re-using IP, and increasing ecosystem collaboration to improve our efficiency, including a significant reduction of design rules for future process nodes.

 

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Process and packaging. We are creating a new wave of compute engines that mix and match different process technologies and then connect them with high-performance, low-power packaging technologies like EMIB1 and Foveros1, the industry’s first implementation of stacked processing components. This disaggregated design approach allows us to manufacture different components of a chip on different processes, giving us the flexibility to use the process that best serves our customers.

§    We launched our Intel Core processors with Intel® Hybrid Technology, also referred to as Lakefield, which use Foveros 3D stacking technology to achieve a dramatic reduction in package area.

§    We introduced our 10nm SuperFin Technology, a redefinition of the FinFET with new SuperMIM capacitors. It enables the largest single intranode enhancement in our history. We are planning further 10nm intranode enhancements.

xPU architecture. The future is a diverse mix of scalar, vector, matrix, and spatial architectures deployed in CPU, GPU, accelerator, and FPGA sockets, enabled by a scalable software stack and integrated into systems by advanced packaging technology. We are building processors that span four major computing architectures, moving toward an era of heterogeneous computing:

§    CPU. We started shipping our 11th Gen Intel Core processors, with our next-generation Willow Cove CPU microarchitecture, which includes redesigned caching hierarchy and security enhancements, among other features. These processors also include the next generation of Intel Iris Xe graphics architecture with upgraded 3D performance and media engine capabilities.

§    GPU. We launched the Intel Iris Xe MAX GPU for laptops and the first discrete Intel Server GPU. We also powered on our next-generation GPU for client, referred to as DG2.

 

1

Intel’s definition is included in “Key Terms” within the Financial Statements and Supplemental Details in our 2020 Annual Report on Form 10-K.

 

     

 

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§    Accelerator. Habana Gaudi accelerators are at the forefront of AI solutions for data centers. Amazon Web Services announced that Habana Gaudi will be used to power future Amazon Elastic Compute Cloud instances.

§    FPGA. We announced Intel® Stratix® 10 NX and Intel Stratix 10 AX FPGAs, extending our Intel Stratix 10 FPGA family.

Memory. With our Intel® OptaneTM technology, we are developing products to disrupt the memory and storage hierarchy.

§    The Intel Optane DC persistent memory 200 series is available with 3rd Gen Intel Xeon Scalable platforms and will be supported with the Ice Lake server processor. The series is targeted at many workloads, including in-memory AI and analytics, databases, and virtual machine per container density.

Interconnect. We deliver leading technologies that scale across all interconnect layers, spanning on-die, on-package, data center, and long-distance networks.

§    We have a broad portfolio of data center connectivity products, including Intel® Ethernet, Intel® Silicon Photonics Optical Transceivers, and Intel® TofinoTM P4-programmable Ethernet switch ASICs.

§    The new 11th Gen Intel Core processors introduced integrated ThunderboltTM 4 and USB4. Thunderbolt 4, the next-generation universal cable connectivity solution, delivers increased minimum performance, expanded capabilities, and USB4 specification compliance. Thunderbolt 4 enables docks with up to four Thunderbolt ports and universal cables up to 2 meters in length.

Security. We continue to deliver innovation to the market across foundational security, workload protection, and software reliability. We are working with customers and partners to build a more trusted foundation in a data-centric world.

§    The new 11th Gen Intel Core processors include both TME and Intel® Control-flow Enforcement Technology (Intel® CET) security capabilities. TME provides the capability to encrypt the entirety of the physical memory of a system, while Intel CET delivers CPU-level security capabilities to help protect against common malware attack methods that have been a challenge to mitigate with software alone.

§    We announced Intel® Trust Domain Extensions (Intel® TDX), which enhance control of data security and IP protection for the cloud tenant while helping maintain the cloud service provider’s role of managing resources and cloud-platform integrity.

Software. Software unleashes the potential of our hardware platforms across all workloads, domains, and architectures.

§    We released the oneAPI open industry specification and launched the Gold release of Intel’s oneAPI toolkits in support of our xPU roadmap. Our oneAPI toolkits enable developers to build cross-architecture applications using a single-code base across xPUs that take advantage of unique hardware features and lower software and maintenance cost. Developers can choose the best architecture for the problem they are solving without needing to rewrite software for different architectures and platforms.

§    The OpenVINO toolkit brings the full power of our xPU roadmap to the Internet of Things, client, and data center businesses. This complementary production-level toolkit focuses on helping developers deliver high-performance deep learning inference and computer vision across CPU, GPU, and FPGA products.

 

     

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IP Rights

We own and develop significant IP and related IP rights around the world that support our products, services, R&D, and other activities and assets. Our IP portfolio includes patents, copyrights, trade secrets, trademarks, mask work, and other rights. We actively seek to protect our global IP rights and to deter unauthorized use of our IP and other assets. For a detailed discussion of our IP rights, see “Intellectual Property Rights and Licensing” within Other Key Information in our 2020 Annual Report on Form 10-K.

 

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“In addition to pledging funds, Intel gave COVID-19 scientists and researchers free access to our vast worldwide intellectual property portfolio this year in the hope and belief that making this intellectual property freely available to them will save lives. We will continue to invent—and protect—our intellectual property, but we offered it freely to those working to protect people from the pandemic.”

 

—Steve Rodgers

Executive Vice President and General Counsel

 

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Manufacturing Capital

 

 

We are transforming from a traditional IDM to a modern IDM by investing to lead advances in silicon technology, leaning into our expertise and manufacturing scale, while evolving to engage with the ecosystem and leveraging our disaggregated design capabilities. Unlike many other semiconductor companies, we primarily design and manufacture our products in our own manufacturing facilities and we will continue to integrate engineering and manufacturing to provide new products with significant cost advantage. At the same time, our architectural shift to die disaggregation allows us to mix and match architectures, IP, process nodes, and silicon that creates increasing flexibility for our products.

In developing new generations of manufacturing process technology, we seek to realize the benefits from Moore’s Law, a law of economics predicted by our co-founder Gordon Moore more than 50 years ago. Realizing Moore’s Law can create economic benefits as we are able to either reduce a chip’s cost as we shrink its size, or increase functionality and performance of a chip while maintaining the same cost with higher density. This makes possible the innovation of new products with higher performance while balancing power efficiency, cost, and size to meet customers’ needs. Our ability to optimize and apply our manufacturing expertise to deliver more advanced, differentiated products has been foundational to our success and is a continued focus of our investments.

 

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“The IDM model has been foundational to Intel’s success as a global leader in semiconductor manufacturing by enabling product optimization, improved economics, and supply assurance. We are committed to be the supplier of choice for achieving best-in-class performance and to deliver world-changing products on a predictable cadence for our customers.”

 

—Keyvan Esfarjani

Senior Vice President and General Manager of Manufacturing and Operations

We shipped higher volumes of 10nm products in 2020 than we had anticipated at the beginning of the year. We also launched our 11th Gen Intel Core processors with new 10nm SuperFin Technology.

We announced in July 2020 that our 7nm-based CPU product timing would be delayed and that the primary driver was the yield of our 7nm manufacturing process. We will continue to invest in our future process technology roadmap and advanced packaging technologies to differentiate our products, provide manufacturing optionality and deliver a predictable cadence of leadership products to our customers.

 

     

 

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“Our goal is to enable leadership products for Intel by delivering predictable process and packaging technology innovation.”

 

—Ann Kelleher

Senior Vice President and General Manager of Technology Development

 

Network and Supply Chain

Our global supply chain supports internal partners across architecture, product design, technology development, manufacturing and operations, sales and marketing, and business units, with the goal of enabling product and process leadership, industry-leading total cost of ownership, and uninterrupted supply for our customers. Our supply chain ecosystem comprises thousands of suppliers globally. Our worldwide site expansion projects remained on track despite disruptions from the COVID-19 pandemic. In addition to our own manufacturing capacity, we continue to use third-party foundries to expand the ways in which we can support our customers. These third-party solutions complement our manufacturing and provide additional flexibility. Our world-class safety standards and supply chain operations, including our robust risk management and crisis response model, have to date allowed our worldwide factory and supply chain network to continue to operate safely and with mostly on-time deliveries despite the pandemic.

 

 

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“As Intel pursues an expanded data-centric market, our collaboration with our wide-ranging supplier ecosystem is deeper, more vibrant, and farther reaching than ever. Together with the ecosystem, we are focused on enabling technology advancements to deliver uninterrupted supply of leadership products to our customers.”

 

—Dr. Randhir Thakur

Senior Vice President and Chief Supply Chain Officer

 

The majority of our logic wafer manufacturing is conducted in the U.S. We have 10 manufacturing sites—six are wafer fabrication, three are assembly/test facilities, and our Costa Rica site added in 2020 is a test-only site. The following map shows our present factory sites and the countries where we have a significant R&D and/or sales presence. In response to COVID-19, we quickly made operational changes and adopted measures to enable a continued safe environment for our employees and operation of our manufacturing sites.

Our manufacturing facilities are primarily used for silicon wafer manufacturing, assembling, and testing of our platform and memory products. We operate in a network of manufacturing facilities integrated as one factory to provide the most flexible supply capacity, allowing us to better analyze our production costs and adapt to changes in capacity needs. Our new process technologies are transferred identically from a central development fab to each manufacturing facility. After transfer, the network of factories and the development fab collaborate to continue driving operational improvements. This enables fast ramp of the operation, fast learning, and better quality control.

 

 

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Our NAND memory fabrication facility in Dalian, China is included in the transaction entered into with SK hynix to divest our NAND memory business, and is part of the NAND assets held for sale as of December 26, 2020. Our Intel Optane memory business is expressly excluded from this transaction. The next generations of Intel Optane technology and SSDs are being developed in New Mexico following the sale of our non-controlling interest in IMFT to Micron Technology, Inc. (Micron) in 2019. We will continue to purchase product manufactured by Micron under our supply agreement, which includes the next generation of Intel® 3D XPointTM technology.

 

     

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Human Capital

Culture is critically important to Intel’s success. We are re-energizing our culture to deliver on our corporate purpose and to attract, develop, and retain top talent needed to build transformative products and services that help our customers succeed in an increasingly data-driven world. We invest in our highly-skilled global workforce of 110,600 people by seeking to create a diverse, inclusive, and safe work environment where our employees can learn, innovate, and deliver their workplace best every day.

Our values—fearless, inclusion, customer-obsessed, one Intel, truth and transparency, and quality—guide how we make decisions, treat each other, and serve our customers. All employees are responsible for upholding these values, the Intel Code of Conduct, and Intel’s Global Human Rights Principles, which form the foundation of our policies and practices and ethical business culture.

 

 

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“People with diverse perspectives, experiences, and input are critical to Intel’s innovation, playing important roles in key projects and programs across the company. An essential element of our growth strategy is to build a culture that empowers and inspires employees to collaborate and create, as we strive to become the most inclusive workplace on the planet.”

 

—Sandra Rivera

Executive Vice President and Chief People Officer

 

Inclusion

 

Diversity and inclusion are core to Intel’s values and instrumental in driving innovation and delivering stronger business growth. We achieved our 2020 goal of full representation in our U.S. workforce two years ahead of schedule, the result of an integrated strategy focused on hiring, retention, and progression. We are proud of what we have accomplished to advance diversity and inclusion, but we recognize we still have work to do, including beyond the walls of Intel. Our RISE strategy and 2030 goals set our global ambitions for the next decade, including doubling the number of women in senior leadership; exceeding 40% female representation in technical roles, including engineering positions and other roles with technical job requirements; increasing the percentage of employees who self-identify as having a disability to 10%; and ensuring accountability for embedding inclusive leadership practices across our business. Our goals also include doubling the number of underrepresented minorities in U.S. senior leadership. To drive accountability, we continue to link a portion of our executive and employee compensation to diversity and inclusion metrics.

 

Today’s greatest challenges require a shared commitment to a plan and meaningful action. That is why we have committed our scale, expertise, and reach through our comprehensive RISE strategy to work with customers and other stakeholders to accelerate the adoption of inclusive business practices across industries. We are creating and implementing a Global Inclusion Index and convening a coalition of companies to focus on unified goals and metrics that will be shared through the index. This collective effort will allow the industry to more clearly identify actions needed to advance progress. We will also continue to collaborate on initiatives that expand the diverse pipeline of talent for our industry, advance social equity, make technology fully inclusive, and expand digital readiness for millions of people around the world.

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Compensation and Benefits

We strive to provide pay, benefits, and services that help meet the varying needs of our employees. Our total rewards package includes market-competitive pay, broad-based stock grants and bonuses, an employee stock purchase plan, healthcare and retirement benefits, paid time off and family leave, parent reintegration, fertility assistance, flexible work schedules, sabbaticals, and on-site services. Since 2019, we have achieved gender pay equity globally and we continued to maintain race/ethnicity pay equity in the U.S. We achieve pay equity by closing the gap in average pay between employees of different genders or race/ethnicity in the same or similar roles after accounting for legitimate business factors that can explain differences, such as location, time at grade level, and tenure. We also advanced transparency in our pay and representation data by publicly releasing our EEO-1 survey pay data in 2019. Although the U.S. Equal Employment Opportunity Commission subsequently decided it would not continue to require reporting of pay information3, we felt it was important to continue collecting the data and to disclose it publicly in 2020. We believe that our holistic approach toward pay equity, representation, and creating an inclusive culture enables us to cultivate a workplace that helps employees develop and progress in their careers at all levels.

 

1

Senior leadership refers to salary grades 10+ and equivalent grades. While we present male and female, we acknowledge this is not fully encompassing of all gender identities.

2

The term underrepresented minority (URM) is used to describe diverse populations, including African American, Hispanic, and Native American employees in the U.S.

3

Updated since the 2020 Annual Report on Form 10-K was filed.

 

     

 

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To aid and support employees during COVID-19, we are investing more than $100 million in additional benefits, including special recognition for employees working on site. We also put in place a telecommuting reimbursement program to help employees required to work from home improve their workspaces, and increased flexibility in our leave programs to support employees caring for children and others.

Growth and Development

We invest significant resources to develop the talent needed to remain at the forefront of innovation and make Intel an employer of choice. We offer extensive training programs and provide rotational assignment opportunities. We implemented a new performance management system to support our culture evolution and to increase focus on continuous learning and development. Through our regular Employee Experience Surveys, employees can voice their perceptions of the company and their work experience, including learning and development opportunities. Our undesired turnover rate was 4% in 2020.

Health, Safety, and Wellness

Our commitment in Intel’s Environmental, Health, and Safety Policy is to provide a safe and injury-free workplace. We continually invest in programs designed to improve physical, mental, and social well-being. We provide access to a variety of innovative, flexible, and convenient health and wellness programs, including on-site health centers, which were increasingly critical this year for our essential workers who have worked on site since the start of the COVID-19 pandemic. Throughout our response to COVID-19, our priority has remained protecting the health and safety of our employees. Intel’s Pandemic Leadership Team—which has been in place for 15 years—regularly reviews and adapts our policies based on evolving research and guidance related to the virus. In support of our 2030 goals, we will continue to build our strong safety culture and drive global expansion of our corporate wellness program through continued employee education and engagement activities.

 

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Social and Relationship Capital

We are committed to engaging in corporate responsibility and sustainability initiatives that support our communities and help us develop trusted relationships with our stakeholders. Proactive engagement with our stakeholders and investments in social impact initiatives, including those aligned with the United Nations Sustainable Development Goals, advance our position as a leading corporate citizen and create shared value for Intel, our global supply chain, and our communities.

Economic and social. The health of our business and local economies depends on continued investments in innovation. We provide high-skill, high-paying jobs around the world. Many of these are manufacturing and R&D jobs located in our own domestic and international factories. We also benefit economies through our R&D ecosystem spending, sourcing activities, consumer spending by our employees, and tax payments. We make sizable capital investments and provide leadership in public-private partnerships to spur economic growth and innovation.

We stand at the forefront of new technologies that are increasingly being used to empower individuals, companies, and governments around the world to solve major societal challenges. We also aim to empower people through education and advance social initiatives to create career pathways into the technology industry. This has included our global Intel AI for Youth program, scaled in partnership with governments and institutions to empower youth with digital readiness and AI skills, as well as our multi-year partnerships with historically black colleges and universities in the U.S. aimed at increasing the number of African Americans who pursue electrical engineering, computer engineering, and computer science fields. Our employees and retirees actively share their expertise through volunteer initiatives in the communities where we operate. These efforts contributed more than 10 million hours of service over the past decade, and our new goals include a commitment to volunteer an additional 10 million hours by 2030. In 2020, we volunteered 910 thousand hours. COVID-19 presented challenges for in-person volunteering, resulting in lower reported volunteer hours compared to prior years. However, we saw an outpouring of support from employees for virtual volunteering, donations, and innovative technology projects to support our communities. In April, we announced the Pandemic Response Technology Initiative, a commitment of $50 million to combat COVID-19. Our focus is to leverage our technology, expertise, resources, and our global ecosystem, to accelerate access to technology that can combat the current pandemic and get ahead of future pandemics through scientific discovery, enable remote learning for students, and aid in economic recovery. To date, we have partnered with many organizations on numerous projects across sectors, including technology, healthcare, education, industrial, retail, transportation, and academia.

Human rights commitment. We are committed to maintaining and improving processes to avoid human rights violations related to our operations, supply chain, and products. We have established an integrated approach to managing human rights across our business, including board-level oversight and the involvement of senior-level Management Review Committees. We also meet throughout the year with external stakeholders and experts on human rights to continue to inform and evolve our human rights policies and oversight processes. While we do not always know nor can we control what products our customers create or the applications end users may develop, we do not tolerate our products being used to violate human rights. Where we become aware of a concern that Intel products are being used by a business partner in connection with abuses of human rights, we restrict or cease business with the third party until we have high confidence that Intel’s products are not being used to violate human rights. As a result, in 2020 we restricted certain sales based on our Human Rights Principles that would have otherwise been considered lawful.

 

     

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Supply Chain Responsibility

We actively manage our supply chain to help reduce risk, improve product quality, achieve environmental and social goals, and improve overall performance and value creation for Intel, our customers, and our suppliers. To drive responsible and sustainable practices throughout our supply chain, we have robust programs to educate and engage suppliers that support our global manufacturing operations. We actively collaborate with other companies and lead industry initiatives on key issues such as improving transparency around climate and water impacts in the global electronics supply chain and, as part of our RISE strategy, we will advance collaboration across our industry on responsible minerals sourcing.

Over the past decade, we have directly engaged with our suppliers to verify compliance and build capacity to address risks of forced and bonded labor and other human rights issues. We perform supplier audits and identify critical direct suppliers to engage through capability-building programs, which help suppliers build sustainability acumen and verify compliance with the Responsible Business Alliance and our Code of Conduct. The suppliers covered by these audits represent 78% of cash payments made to managed suppliers. We also engage with indirect suppliers through our programs on forced and bonded labor, responsible minerals, and supplier diversity. Although COVID-19 presented travel and safety challenges in 2020 that impacted our ability to complete as many in-person supplier audits as in the previous year, we continued to engage with our suppliers and communicate our expectations and requirements. To achieve our 2030 goals, we will significantly expand the number of suppliers covered by our engagement activities to deepen accountability for human rights.

Our commitment to diversity and inclusion also extends to our suppliers. We believe a diverse supply chain supports greater innovation and value for our business. We achieved our 2020 goal to reach $1 billion in annual spending with diverse-owned suppliers and our new 2030 goals include doubling this figure over the next decade. Beginning in 2021, we will not retain or use outside law firms in the U.S. that are average or below average on diversity for their equity partners. We are applying a similar rule to firms used by our tax department, including non-legal firms.

 

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Natural Capital

Driving to the lowest environmental footprint possible helps create efficiencies, lower costs, and respond to the needs of our stakeholders. We invest in conservation projects and set company-wide environmental targets to drive reductions in greenhouse gas emissions, energy use, water use, and waste generation. We build energy efficiency into our products to help our customers lower their own emissions and energy costs, and we collaborate with policymakers and other stakeholders to use technology to address environmental challenges. We achieved our 2020 greenhouse gas goal, reducing our emissions 39% on a per unit basis from 2010 levels. Through our 2030 goals we will continue to drive to higher levels of operational efficiency, including a further 10% reduction in our carbon emissions on an absolute basis even as we continue to grow. Our 2030 strategy and goals also focus on improving product energy efficiency and increasing our “handprint”—the ways in which Intel technologies can help others reduce their footprints, including Internet of Things solutions that enable intelligence in machines, buildings, supply chains, and factories, and make electrical grids smarter, safer, and more efficient.

Climate and Energy

We focus on reducing our own climate impact, and over the past two decades have reduced our direct emissions and indirect emissions associated with energy consumption. We achieved our 2020 energy goal, saving more than 4.5 billion kWh since 2012 by investing in energy conservation projects in our global operations. In 2020, we conserved more than 155 million kWh of energy in support of our new 2030 goal to conserve an additional 4 billion kWh of energy over the next 10 years. In addition to conserving energy, we invest in green power and on-site alternative energy projects that provide power directly to our buildings. We continue to link a portion of our executive and employee compensation to corporate responsibility metrics. In 2020, these included a climate-related metric to use 75% renewable energy globally during the year, which supports our 2030 goal to achieve 100% renewable energy use across our global manufacturing operations. In 2020, we signed on to RE100, a global coalition of businesses committed to 100% renewable electricity use.

We are committed to transparency around our carbon footprint and climate risk and use the framework developed by the TCFD to inform our disclosure on climate governance, strategy, risk management, and metrics and targets. For governance and strategy, we follow an integrated approach to address climate change, with multiple teams responsible for managing climate-related activities, initiatives, and policies. Strategies and progress toward goals are reviewed with senior executives and the Intel Board of Directors’ Corporate Governance and Nominating Committee. We describe our overall risk management processes in our Proxy Statement, and describe our climate-related risks and opportunities in our annual Corporate Responsibility Report, the Intel Climate Change Policy, and “Risk Factors” within our 2020 Annual Report on Form 10-K. In addition to what is included in our Annual Report on Form 10-K, results of our 2020 goals and information on our 2030 goals, are included in our Corporate Responsibility Report. Our Corporate Responsibility Report includes a mapping of our disclosure to the TCFD, the Sustainability Accounting Standards Board framework, and our CDP Climate Change Survey, all available on our website.1

 

1 

The contents of our website and our Corporate Responsibility Report, Climate Change Policy, and CDP Climate Change Survey are referenced for general information only and are not incorporated by reference in this Proxy Statement.

 

     

 

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Water Stewardship

Water is essential to the semiconductor manufacturing process. We use ultrapure water to remove impurities from our silicon wafers, and we use fresh and reclaimed water to run our manufacturing facility systems. Over the past decade, our sustainable water management efforts and partnerships have enabled us to conserve billions of gallons of water, and through our 2030 goals we have committed to conserve an additional 60 billion gallons in this decade. As part of this commitment, we plan to achieve net positive water use globally. In 2020, we linked a portion of our executive and employee compensation to our target to conserve more than 5 billion gallons of water in our operations and fund new water restoration projects in collaboration with environmental and community partners that restore more than 1 billion gallons of water during the year to local watersheds.

 

 

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Circular Economy and Waste Management

We have long been committed to waste management, recycling, and circular economy strategies that enable the recovery and productive re-use of waste streams. We achieved our 2020 waste management goals, reaching a 93% recycle rate for our non-hazardous waste and sending zero hazardous waste to landfills.1 Our 2030 goals include a target of zero total waste to landfill, as well as implementation of circular economy strategies for 60% of our manufacturing waste streams in partnership with our suppliers. This can include reuse of waste streams directly in our own operations or enabling reuse of our waste streams by other industries.

 

 

 

 

1

We define zero hazardous waste to landfill as 1% or less.

 

     

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 Director Compensation

      
      

 

The general policy of the Board is that compensation for non-employee directors should be a mix of cash and equity, with the majority of compensation provided in the form of equity. The Corporate Governance and Nominating Committee, consisting solely of independent directors, has the primary responsibility for reviewing director compensation and considering any changes in how we compensate our non-employee directors. The Board annually reviews the committee’s recommendations and determines the amount of director compensation.

Intel’s Legal department, our Corporate Secretary, and the Human Resources department support the committee in recommending director compensation and creating director compensation programs. In addition, the committee engages outside advisors, experts, and others to assist the committee. The director peer group is the same as the peer group considered by the Compensation Committee in setting executive compensation for 2020 and consisted of 15 technology companies, as described in detail below under “Compensation Discussion and Analysis; External Competitive Considerations for 2020.” The committee targets cash and equity compensation at the median of the director peer group.

For 2020 the Board made no changes to the annual compensation for non-employee directors from 2019, except for the addition of an independent chairman fee, which was determined, with the advice of Compensia, the independent compensation consultant, based on the Board’s assessment of competitive market data of our peer group. The 2020 annual compensation for non-employee directors consisted of the following elements:

 

 

Board Fees

    
 

Cash retainer1

  

    $90,000

 

Restricted stock units (RSUs)

       Targeted value of approximately $220,000
 

Committee Fees1

    

 

 

Audit Committee chair

  

    $35,000

 

Compensation Committee chair

  

    $25,000

 

Corporate Governance and Nominating Committee chair

  

    $20,000

 

Executive Committee chair

  

    $10,000

 

Finance Committee chair

  

    $15,000

 

Non-chair Audit Committee member

  

    $15,000

 

Non-chair Compensation Committee member

  

    $10,000

 

Independent Chairman Fee2

    

 

 

Additional cash retainer

  

    $175,000

 

Lead Director Fee2

    

 

 

Additional cash retainer

  

    $40,000

 

1 

Paid in quarterly installments.

2 

Paid in quarterly installments, which was paid on a pro-rated basis to Dr. Ishrak during his time as Lead Director for January 2020, and independent Chairman for the remainder of 2020.

The Corporate Governance and Nominating Committee reviews director compensation on an annual basis, considering factors such as workload and market data. Intel does not pay its management directors for Board service in addition to their regular employee compensation. For 2020, Messrs. Bryant and Swan served as our employee directors and did not receive any compensation for their services as members of our Board of Directors.

 

     

 

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Director Compensation for Fiscal Year 2020

The following table details the compensation of Intel’s non-employee directors for the 2020 fiscal year.

Director Compensation for Fiscal Year 2020 Table

 

Name

    Fees Earned    

or Paid in

Cash ($)

Stock

    Awards1    

($)

All Other

    Compensation2    

($)

    Total    

($)

       

James J. Goetz3

 

—    

 

343,500    

 

—    

 

343,500    

       

Alyssa Henry4

 

22,500    

 

305,200    

 

—    

 

327,700    

       

Reed Hundt5

 

50,000    

 

—    

 

—    

 

50,000    

       

Omar Ishrak

 

305,000    

 

209,500    

 

—    

 

514,500    

       

Risa Lavizzo-Mourey6

 

—    

 

311,300    

 

10,000    

 

321,300    

       

Tsu-Jae King Liu

 

120,000    

 

209,500    

 

10,000    

 

339,500    

       

Gregory D. Smith

 

125,000    

 

209,500    

 

10,000    

 

344,500    

       

Dion J. Weisler7

 

50,000    

 

165,100    

 

—    

 

215,100    

       

Andrew Wilson

 

115,000    

 

209,500    

 

—    

 

324,500    

       

Frank D. Yeary8

 

120,000    

 

209,500    

 

5,000    

 

334,500    

 

1

With respect to all directors except Mr. Hundt and Mr. Weisler, includes May 14, 2020, Annual Equity Award of 3,721 RSUs with a grant date fair value computed in accordance with the Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 718) and assuming a risk-free rate of return of 0.12% and a dividend yield of 2.29%. For additional information, see “RSUs in Lieu of Fees” and “Annual Equity Awards” below.

2

The Intel Foundation made matching charitable contributions on behalf of Dr. Lavizzo-Mourey ($10,000), Dr. Liu ($10,000), Mr. Smith ($10,000), and Mr. Yeary ($5,000). Directors’ charitable contributions to schools and universities that meet the guidelines of Intel’s employee charitable matching gift program are eligible for matching funds.

3 

Mr. Goetz (i) joined the Board on November 13, 2019, and was granted 2,080 RSUs on January 30, 2020, with the grant date fair value computed in accordance with ASC Topic 718 and assuming a risk-free rate of return of 1.6% and a dividend yield rate of 2.0% and (ii) elected RSUs in lieu of his 2020 cash fees, and these RSUs were granted in January 2021.

4 

Ms. Henry (i) joined the Board on January 15, 2020, and was granted 1,486 RSUs on January 30, 2020, with the grant date fair value computed in accordance with ASC Topic 718 and assuming a risk-free rate of return of 1.6% and a dividend yield rate of 2.0% and (ii) effective Q2 2020, elected RSUs in lieu of her 2020 cash fees, and these RSUs were granted in January 2021.

5 

Mr. Hundt retired from the Board in May 2020.

6

Dr. Lavizzo-Mourey (i) was granted 1,580 RSUs on January 30, 2020 in lieu of her annual cash retainer for 2019, with the grant date fair value computed in accordance with ASC Topic 718 and assuming a risk-free rate of return of 1.6% and a dividend yield of 2.0% and (ii) elected RSUs in lieu of her 2020 cash fees, and these RSUs were granted in January 2021.

7 

Mr. Weisler (i) joined the Board on June 15, 2020, and was granted 3,534 RSUs on July 30, 2020, with the grant date fair value computed in accordance with ASC Topic 718 and assuming a risk-free rate of return of 0.1% and a dividend yield rate of 2.8% and (ii) effective Q4 2020, elected RSUs in lieu of his 2020 cash fees, and these RSUs were granted in January 2021.

8 

Mr. Yeary elected to defer his 2020 annual cash compensation until his retirement from the Board.

RSUs in Lieu of Fees. Under the “RSUs in Lieu of Cash Election” program, non-employee directors can elect to receive 100% of their cash compensation in the form of RSUs (but not less than 100%). RSUs elected in lieu of payments in cash generally vest on the one-year anniversary of the grant date.

Annual Equity Awards. Each non-employee director received annual grants of RSUs with a target value on the grant date of approximately $220,000.The fair value of an RSU for accounting purposes is discounted for present value of dividends that are not paid on RSUs prior to vesting. The grant date and vesting of the RSUs align with the intended service on the Board, from election at the annual stockholders’ meeting to the date that is the earlier of the one-year anniversary of the grant date or the date of the next annual stockholders’ meeting.

All RSU shares are payable upon retirement from the Board if a director is 72 years old or has at least seven years of service on the Board. Directors will not receive dividend equivalents on unvested RSUs.

Deferred Compensation Program. This program allows non-employee directors to defer their cash and equity compensation. Under the cash deferral program, directors may defer up to 100% of their cash compensation and receive an investment return on the deferred funds as if the funds were invested in Intel common stock. Participants receive credit for reinvestment of dividends under this cash deferral program. Plan participants must elect irrevocably to receive the deferred funds either in a lump sum or in equal annual installments over five or 10 years, and to begin receiving distributions either at retirement or at a future date not less than 24 months from the election date. This deferred cash compensation is an unsecured obligation for Intel.

 

     

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The equity deferral program allows directors to defer the settlement of their vested equity awards until termination of service. Directors do not receive dividends on deferred RSUs and OSUs, except the terms of OSUs granted prior to 2017 generally provide that directors receive dividend equivalents on the final shares earned and vested, payable upon vesting in the form of additional shares. If a director elected to defer his or her OSUs granted prior to 2017, the settlement of these dividend equivalent shares will also be deferred along with the vested OSU shares, but further dividends are not earned or payable on any shares during the deferral period between vesting and settlement.

Outstanding Equity Awards for Directors

The following table provides information on the outstanding equity awards held at fiscal year-end 2020 by the non-employee directors who served during fiscal 2020, with OSUs shown at their target amount unless otherwise specified. Market value is determined by multiplying the number of shares by the closing price of Intel common stock on Nasdaq on the last trading day of the fiscal year unless otherwise specified.

Outstanding Equity Awards for Directors at Fiscal Year-End 2020 Table

 

  STOCK UNITS

 

Name

 

Unvested
RSUs1,4

(#)

Market Value of

Unvested RSUs2

($)

Unvested
OSUs1,3

(#)

Market Value of

Unvested OSUs2,3

($)

       

James J. Goetz

 

3,721    

 

175,147    

 

—    

 

—    

       

Alyssa Henry

 

3,721    

 

175,147    

 

—    

 

—    

       

Reed Hundt

 

—    

 

—    

 

2,102    

 

98,941    

       

Omar Ishrak

 

4,531    

 

213,274    

 

2,102    

 

98,941    

       

Risa Lavizzo-Mourey

 

12,040    

 

566,723    

 

1,422    

 

66,934    

       

Tsu-Jae King Liu

 

4,531    

 

213,274    

 

2,102    

 

98,941    

       

Gregory D. Smith

 

10,411    

 

490,046    

 

2,102    

 

98,941    

       

Dion J. Weisler

 

3,534    

 

166,345    

 

—    

 

—    

       

Andrew Wilson

 

10,411    

 

490,046    

 

2,102    

 

98,941    

       

Frank D. Yeary

 

8,790    

 

413,745    

 

2,102    

 

98,941    

 

1

Vested but deferred awards are excluded from this column. Awards in this column may vest and become payable upon the director’s retirement from the Board, depending on the director’s age or length of service.

2

The market value of vested but deferred awards is excluded from this column.

3

This column reflects target number of OSUs granted in 2018. On February 28, 2021, all outstanding unvested OSUs settled and resulted in no payout to any directors.

4

Annual RSUs vest 100% on the earlier of the one-year anniversary of the grant date or the date of the next annual stockholders’ meeting; RSUs in lieu of cash fees vest 100% on the one-year anniversary of the grant date.

Non-Employee Director Stock Ownership Guidelines. Intel’s stock ownership guidelines state that each non-employee director must acquire and hold at least five times (5x) the annual cash retainer amount within five years of joining the Board. Unvested OSUs and unvested RSUs do not count toward this requirement. Deferred OSUs and RSUs count toward this requirement once they vest. As of December 26, 2020, each non-employee director nominee had met these ownership guidelines or still had time to do so.

Equipment. Intel provides each non-employee director a laptop computer for personal use and offers each director the use of other equipment employing Intel® technology.

Travel Expenses. Intel does not pay meeting fees. We reimburse our directors for their travel and related expenses in connection with attending Board meetings and Board-related activities, such as Intel site visits and sponsored events, as well as continuing education programs.

 

     

 

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 Certain Relationships and Related Transactions

      
      

 

The Board’s Audit Committee is responsible for review, approval, or ratification of “related-person transactions” involving Intel or its subsidiaries and related persons. Under SEC rules, a related person is a director, executive officer, nominee for director since the beginning of the previous fiscal year, or a greater than 5% beneficial owner of the company at the time of the applicable transaction, and their immediate family members. Intel has adopted written policies and procedures that apply to any transaction or series of transactions in which the company or a subsidiary is a participant, the amount involved exceeds $120,000, and a related person has a direct or indirect material interest.

The Audit Committee has determined that, barring additional facts or circumstances, a related person does not have a direct or indirect material interest in the following categories of transactions:

 

  §  

any transaction with another company for which a related person’s only relationship is as an employee (other than an executive officer), director, or beneficial owner of less than 10% of that company’s shares, if the amount involved does not exceed the greater of $1 million or 2% of that company’s total annual revenue;

 

  §  

any charitable contribution, grant, or endowment by Intel or the Intel Foundation to a charitable organization, foundation, or university for which a related person’s only relationship is as an employee (other than an executive officer) or a director, if the amount involved does not exceed the lesser of $1 million or 2% of the charitable organization’s total annual receipts, or any matching contribution, grant, or endowment by the Intel Foundation;

 

  §  

compensation to executive officers determined by the Compensation Committee;

 

  §  

compensation to directors determined by the Board;

 

  §  

transactions in which all security holders receive proportional benefits; and

 

  §  

banking-related services involving a bank depository of funds, transfer agent, registrar, trustee under a trust indenture, or similar service.

Intel personnel in the Legal and Finance departments review transactions involving related persons that are not included in one of the preceding categories. If they determine that a related person could have a significant interest in such a transaction, the transaction is forwarded to the Audit Committee for review. The Audit Committee determines whether the related person has a material interest in a transaction and may approve, ratify, rescind, or take other action with respect to the transaction in its discretion. The Audit Committee reviews all material facts related to the transaction and takes into account, among other factors it deems appropriate, whether the transaction is on terms no more favorable than terms generally available to an unaffiliated third party under the same or similar circumstances; the extent of the related person’s interest in the transaction; and, if applicable, the availability of other sources of comparable products or services.

Since the beginning of 2020, there were no related-person transactions under the relevant standards.

 

     

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 Code of Conduct

      
      

 

Our Code of Conduct applies to our non-employee directors with respect to their Intel-related activities, as well as to our executive officers and all other employees. We expect our directors, executives, and other employees to avoid any activity that is or has the appearance of being a conflict of interest with Intel. This includes not engaging in activities that compete with or are adverse to Intel, or that interfere with the proper performance of duties or responsibilities to Intel, and not using confidential company information, company assets, or their position at Intel for personal gain in violation of our policy.

Directors and executive officers must inform us of any situation that may be perceived as a conflict of interest with Intel, and the Board oversees the resolution of any potential conflicts. The Board oversees resolution of any conflict or apparent conflict involving a director or executive officer, and may enlist the Legal Department to determine whether a conflict exists, and if so, how to resolve it. Any waivers of these conflict rules with regard to a director or an executive officer require the prior approval of the Board. Our Code of Conduct is our code-of-ethics document. Our Code of Conduct is posted on our website at www.intel.com. We will disclose future amendments to certain portions of the Code of Conduct or waivers of such provisions granted to executive officers and directors on our website within four business days following the date of such amendment or waiver.

 

     

 

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 Security Ownership of Certain Beneficial Owners and Management

      
      

 

The following table presents the beneficial ownership of our common stock by beneficial owners of more than 5% of our common stock, each of our directors and listed officers, and all of our directors and executive officers as a group. This information is as of March 1, 2021, except as otherwise indicated in the notes to the table. Amounts reported under “Number of Shares of Common Stock Beneficially Owned as of March 1, 2021” include the number of shares subject to RSUs and stock options that become exercisable or vest within 60 days of such date (which are shown in the columns to the right). Our listed officers are the four current executive officers and two former executive officers identified below in the “Compensation Discussion and Analysis” section of this proxy statement.

Except as otherwise indicated and subject to applicable community property laws, each owner has sole voting and investment power with respect to the securities listed.

 

Stockholder

Number of Shares
of Common Stock

Beneficially

Owned as of

March 1, 2021

Percent of    
Class    

Number of
Shares Subject to
Options Exercisable
as of March 1, 2021
or Which

Become Exercisable

Within 60 Days of
This Date

Number of RSUs
That Vest
Within 60 Days
of March 1, 2021
       

The Vanguard Group, Inc.

  339,140,220 1    8.33 %    

 

 

 

 

 

 

       

BlackRock, Inc.

  309,411,663 2    7.60 %    

 

 

 

 

 

 

Directors and Listed Officers

 

 

 

 

 

 

 

 

 

 

 

 

       

Robert H. Swan

  432,406 3         **         —        
       

Steven R. Rodgers

  109,284        **         5,897        
       

Venkata S. M. Renduchintala

  103,763 4         **         —        
       

Gregory M. Bryant

  103,687 5         **         7,674        
       

George S. Davis

  98,996 6         **         19,225        
       

Navin Shenoy

  79,254        **         7,556        
       

Patrick P. Gelsinger

  1,480 7         **         —        
       

James J. Goetz

  174,800        **         —        
       

Frank D. Yeary

  58,711 8         **         3,721        
       

Alyssa Henry

  16,886        **         —        
       

Tsu-Jae King Liu

  14,203        **         —        
       

Omar Ishrak

  11,478        **         —        
       

Gregory D. Smith

  11,453 9         **         —        
       

Andrew Wilson

  9,520 10         **         —        
       

Risa Lavizzo-Mourey

  9,504 11         **         —        
       

Dion J. Weisler

         **         —        
       

 

         **      

 

 

 

       

All directors and executive officers as a
group (14 individuals)

  699,256 12         **         44,073        

 

**

Less than 1%

1

As of December 31, 2020, based on information set forth in a Schedule 13G/A filed with the SEC on February 8, 2021 by The Vanguard Group (“Vanguard”). Vanguard’s business address is 100 Vanguard Blvd., Malvern, PA 19355. Represents (i) 320,900,358 shares for which Vanguard has sole dispositive power, (ii) 18,239,862 shares for which Vanguard has shared dispositive power, (iii) no shares for which Vanguard has sole voting power, and (iv) 6,712,904 shares for which Vanguard has shared voting power.

2

As of December 31, 2020, based on information set forth in a Schedule 13G/A filed with the SEC on January 29, 2021 by BlackRock, Inc. (“BlackRock”). BlackRock’s business address is 55 East 52nd St., New York, NY 10055. Represents (i) 309,411,663 shares for which BlackRock has sole dispositive power, (ii) no shares for which BlackRock has shared dispositive power, (iii) 265,951,484 shares for which BlackRock has sole voting power, and (iv) no shares for which BlackRock has shared voting power.

3

Includes 3,364 shares held in family trust for which Mr. Swan shares voting and investment power. Mr. Swan’s last date of employment was on February 15, 2021.

4

Represents Dr. Renduchintala’s holdings, including the number of shares subject to RSUs and stock options that became exerciseable or vested within 60 days, as of August 3, 2020, his last date of employment.

 

     

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5

Includes 35 shares held jointly with Mr. Bryant’s children for which Mr. Bryant shares voting and investment power.

6

Includes 1,540 shares held in family trust for which Mr. Davis shares voting and investment power.

7

Mr. Gelsinger was appointed CEO effective February 15, 2021.

8

Includes 47,998 shares held in family trust for which Mr. Yeary shares voting and investment power and 6,182 deferred but vested RSUs held by Mr. Yeary.

9

Includes 410 shares held in a revocable trust by Mr. Smith’s spouse. Also includes 6,690 deferred but vested RSUs held by Mr. Smith.

10

Includes 6,690 deferred but vested RSUs held by Mr. Wilson.

11

Includes 6,146 deferred but vested RSUs held by Dr. Lavizzo-Mourey.

12

Excludes Dr. Renduchintala who ceased to be an executive officer on August 3, 2020, and Mr. Swan who ceased to be an executive officer on February 15, 2021.

 

     

 

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 Proposal 2

      
      

 

Ratification of Selection of Independent Registered Public Accounting Firm

The Audit Committee evaluates the selection of independent auditors each year and has selected Ernst & Young LLP (Ernst & Young) as our independent registered public accounting firm for the current year. Ernst & Young has served in this role since Intel was incorporated in 1968. Representatives of Ernst & Young attended all meetings of the Audit Committee in 2020 except those meetings subject to attorney-client privilege.

Independence of Ernst & Young. The Audit Committee concluded that many factors contribute to the continued support of Ernst & Young’s independence, such as the oversight by the Public Company Accounting Oversight Board (PCAOB) through the establishment of audit, quality, ethics, and independence standards in addition to conducting audit inspections; the mandating of reports on internal control over financial reporting; PCAOB requirements for audit partner rotation; and limitations imposed by regulation and by the Audit Committee on non-audit services provided by Ernst & Young. The Audit Committee has established, and monitors, limits on the amount of non-audit services that Intel may obtain from Ernst & Young. Under the auditor independence rules, Ernst & Young reviews its independence each year and delivers to the Audit Committee a letter addressing matters prescribed under those rules.

Regular Rotation of Primary Engagement Partner. In accordance with applicable rules on partner rotation, Ernst & Young’s primary engagement partner for our audit was changed in 2020, while Ernst & Young’s concurring/reviewing partner for our audit was most recently changed in 2019. The Audit Committee is involved in considering the selection of Ernst & Young’s primary engagement partner when there is a rotation.

Pre-Approval Policies. The Audit Committee pre-approves and reviews audit and non-audit services performed by Ernst & Young, as well as the fees charged by Ernst & Young for such services. In its pre-approval and review of non-audit service fees, the Audit Committee considers, among other factors, the possible effect of the performance of such services on the auditors’ independence.

Factors Considered in Deciding to Re-Engage Ernst & Young. The Audit Committee considers a number of factors in deciding whether to re-engage Ernst & Young as the independent registered public accounting firm, including the length of time the firm has served in this role and an assessment of the firm’s professional qualifications and resources. In this regard, the Audit Committee considered that Intel requires global, standardized, and well-coordinated services, not only for audit purposes, but for other non-audit services items, such as valuation support, IT consulting, and payroll services. Many of these services are provided to Intel by other multinational audit and accounting firms. A change in our independent auditor would require us to replace one or more of the multinational service providers that perform non-audit services for Intel and could significantly disrupt our business due to loss of cumulative knowledge in the service providers’ areas of expertise.

Why We Are Asking Stockholders to Ratify Our Selection of Ernst & Young. As a matter of good corporate governance, the Board submits the selection of the independent audit firm to our stockholders for ratification. If the selection of Ernst & Young is not ratified by a majority of the shares of common stock present or represented during the annual meeting and entitled to vote on the matter, the Audit Committee will review its future selection of an independent registered public accounting firm in light of that vote result. Even if the selection is ratified, the Audit Committee in its discretion may appoint a different registered public accounting firm at any time during the year if the committee determines that such change would be appropriate.

Ernst & Young Expected to Attend Annual Meeting. We expect that a representative of Ernst & Young will attend the annual meeting, and the representative will have an opportunity to make a statement if he or she so chooses. The representative will also be available to respond to appropriate questions from stockholders.

For additional information concerning the Audit Committee and its activities with Ernst & Young, see “Corporate Governance” and “Report of the Audit Committee” in this proxy statement.

 

     

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Ernst & Young LLP’s Fees for 2020 and 2019

The following table shows the fees billed by Ernst & Young for audit and other services provided for fiscal years 2020 and 2019. All figures are net of value-added tax and other similar taxes assessed by non-U.S. jurisdictions on the amount billed by Ernst & Young. All of the services reflected in the following fee table were approved in conformity with the Audit Committee’s pre-approval process, as described in the “Report of the Audit Committee” in this proxy statement.

 

     

2020 ($)

  

2019 ($)

   

Audit Fees

  

 

18,564,000

  

 

16,524,000

   

Audit-Related Fees

  

 

638,000

  

 

1,028,000

   

Tax Fees

  

 

682,000

  

 

955,000

   

All Other Fees

  

 

2,085,000

  

 

90,000

   

Total

  

 

  21,969,000

  

 

18,597,000

Audit Fees. Represent fees for professional services provided in connection with the audit of our financial statements and internal control over financial reporting, the review of our quarterly financial statements, registration statements, and audit services provided in connection with other statutory or regulatory filings.

Audit-Related Fees. Relates to the performance of the audit or review of our financial statements, and are not included in the fees reported in the table above under “Audit Fees.” The services for the fees disclosed under this category primarily include audits of Intel employee benefit plans.

Tax Fees. Relates to services provided for tax compliance and planning.

All Other Fees. Relates to professional fees not included in the categories above. For 2020, all other fees primarily included advisory services fees for working capital optimization.

 

 

 

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Recommendation of the Board

 

The Board of Directors recommends that you vote “FOR” the ratification of the selection of Ernst & Young as our independent registered public accounting firm for fiscal year 2021.

 

 

     

 

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 Report of the Audit Committee

      
      

 

During 2020, only non-management directors comprised the Audit Committee. The Board determined that each member of the Audit Committee is independent under the Nasdaq listing standards. The Audit Committee operates under a written charter adopted by the Board. As described more fully in its charter, the purpose of the Audit Committee is to assist the Board in its general oversight of Intel’s accounting and financial reporting processes, audits of the financial statements, internal control and audit functions, and compliance with legal and regulatory requirements and ethical standards adopted by the company.

Management Responsibilities. Management is responsible for the preparation, presentation, and integrity of Intel’s financial statements; accounting and financial reporting principles; internal controls; and procedures designed to reasonably assure compliance with accounting standards, applicable laws and regulations, and the company’s ethical standards. Intel has a full-time Internal Audit department that reports to the Audit Committee and to management. This department is responsible for objectively reviewing and evaluating the adequacy, effectiveness, and quality of Intel’s system of internal controls related to, for example, the reliability and integrity of Intel’s financial information and the safeguarding of Intel’s assets.

Independent Auditor Responsibilities. Ernst & Young LLP, Intel’s independent registered public accounting firm, is responsible for performing an independent audit of Intel’s consolidated financial statements in accordance with generally accepted auditing standards and expressing an opinion on the effectiveness of Intel’s internal control over financial reporting. In accordance with applicable law, the Audit Committee has ultimate authority and responsibility for selecting, compensating, evaluating, and, when appropriate, replacing Intel’s independent audit firm, and evaluates its independence. The Audit Committee has the authority to engage its own outside advisors, including experts in particular areas of accounting, as it determines appropriate, apart from counsel or advisors hired by management.

Committee Responsibilities. Audit Committee members are not professional accountants or auditors, and their functions are not intended to duplicate or to certify the activities of management and the independent audit firm; nor can the Audit Committee certify that the independent audit firm is “independent” under applicable rules. The Audit Committee serves a Board-level oversight role in which it helps establish the appropriate “tone at the top” and provides advice, counsel, and direction to management and to the auditors on the basis of the information it receives, discussions with management and the auditors, and the experience of the Audit Committee members in business, financial, and accounting matters.

Committee Oversight of Financial Reporting. The Audit Committee’s agenda for the year includes reviewing Intel’s financial statements, internal control over financial reporting, and audit and other matters. The Audit Committee meets each quarter with Ernst & Young, Intel’s Chief Audit Executive, and management to review Intel’s interim financial results (including the use of any non-GAAP measures) before the publication of Intel’s quarterly earnings releases. Management’s and the independent audit firm’s presentations to, and discussions with, the Audit Committee cover various topics and events that may have significant financial impact or are the subject of discussions between management and the independent audit firm (including, for example, implementation of new accounting standards). The Audit Committee reviews and discusses with management and the Chief Audit Executive Intel’s major financial risk exposures and the steps that management has taken to monitor and control such exposures. In accordance with applicable law, the Audit Committee is responsible for establishing procedures for the receipt, retention, and treatment of complaints received by Intel regarding accounting, internal accounting controls, or auditing matters, including confidential, anonymous submissions by Intel’s employees, received through established procedures, of any concerns regarding questionable accounting or auditing matters.

Committee Oversight of Internal Auditor and Independent Audit Firm. Among other matters, the Audit Committee monitors the activities and performance of Intel’s internal auditors and independent registered public accounting firm, including the audit scope, external audit fees, auditor independence matters, and the extent to which the independent audit firm can be retained to perform non-audit services.

In accordance with Audit Committee policy and legal requirements, the Audit Committee pre-approves all services to be provided by Ernst & Young, including audit services, audit-related services, tax services, and other services. In some cases, the full Audit Committee provides pre-approval for as long as a year related to a particular category of service, or a particular defined scope of work subject to a specific budget. In other cases, the Audit Committee has delegated authority to its chair to pre-approve additional services, and the chair then communicates such pre-approvals to the full Audit Committee. The Audit Committee is responsible for overseeing the fee negotiations associated with the retention of our independent audit firm. The Audit Committee believes that the continued retention of Ernst & Young as our independent audit firm is in the best interests of our stockholders.

Committee Oversight of Internal Control Over Financial Reporting. The Audit Committee has reviewed and discussed with management, our management’s assessment of and report on the effectiveness of Intel’s internal control over financial reporting as of December 26, 2020, which it made based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). The Audit Committee also has reviewed

 

     

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and discussed with Ernst & Young its review and report on Intel’s internal control over financial reporting. Intel published these reports in its 2020 Annual Report on Form 10-K for the year ended December 26, 2020, which Intel filed with the SEC on January 21, 2021.

Required Committee Discussions and Communications. The Audit Committee has reviewed and discussed the audited financial statements for fiscal year 2020 with management and Ernst & Young, and management represented to the Audit Committee that Intel’s audited financial statements were prepared in accordance with U.S. generally accepted accounting principles (GAAP). In addition, the Audit Committee has discussed with Ernst & Young, and Ernst & Young represented that its presentations to the Audit Committee included, the matters required to be discussed with the independent registered public accounting firm by applicable PCAOB rules. This review included a discussion with management and Ernst & Young of the quality, not merely the acceptability, of Intel’s accounting principles, the reasonableness of significant estimates and judgments, and the clarity of disclosure in Intel’s financial statements, including the disclosures related to critical accounting estimates and critical audit matters. Ernst & Young has provided the Audit Committee with the written disclosures and the letter required by the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with the independent audit firm and management that firm’s independence.

Recommendation. In reliance on these reviews and discussions, and the reports of Ernst & Young, the Audit Committee has recommended to the Board, and the Board has approved, the inclusion of the audited financial statements in Intel’s 2020 Annual Report on Form 10-K for the year ended December 26, 2020.

Audit Committee, as of March 9, 2021

Greg D. Smith, Chairman

Alyssa Henry

Tsu-Jae King Liu

Frank D. Yeary

 

     

 

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 Proposal 3

      
      

 

Advisory Vote to Approve Executive Compensation of Our Listed Officers

We are asking stockholders to approve, on an advisory basis, the compensation of Intel’s listed officers disclosed in “Compensation Discussion and Analysis,” the Summary Compensation Table, and the related compensation tables, notes, and narrative in this proxy statement.

As a matter of good corporate governance, in 2009 Intel voluntarily began to provide stockholders with an advisory “say on pay” vote on executive compensation. Beginning in 2011, Section 14A of the Securities Exchange Act of 1934, as amended, made this practice mandatory for U.S. public companies. In addition, at Intel’s 2017 Annual Stockholders’ Meeting, a majority of our stockholders voted in favor of holding an advisory vote to approve the executive compensation of our listed officers every year. The Board considered these voting results and decided to adopt (and maintain) a policy providing for an annual advisory stockholder vote to approve our executive compensation. We are therefore holding this year’s advisory vote in accordance with that policy and pursuant to U.S. securities laws and regulations.

Intel’s compensation programs are designed to support its business goals and promote short- and long-term profitable growth of the company. Intel’s equity plans are intended to align compensation with the long-term interests of our stockholders. We urge stockholders to read the “Compensation Discussion and Analysis” section of this proxy statement, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives. We also encourage you to review the Summary Compensation Table and other related compensation tables and narratives, which provide detailed information on the compensation of our listed officers. The Board and the Compensation Committee believe that the policies and procedures described and explained in the “Compensation Discussion and Analysis” reflect our competitive pay positioning strategy, emphasis on incentive-driven pay, and use of goals aligned with our business strategy, and that the compensation of our listed officers reported in this proxy statement is appropriately tied to the company’s financial and operational performance, supports our commitment to good compensation governance, and provides market-based opportunities to attract, retain, and motivate our executive officers in an intensely competitive market for qualified talent.

Although this advisory vote to approve the executive compensation of our listed officers is non-binding, the Compensation Committee will carefully assess the voting results. The “Compensation Discussion and Analysis” in this proxy statement discusses our stockholder engagement efforts over the past year, including how we sought to understand and respond to last year’s say-on-pay vote results, and reflects our commitment to consult directly with stockholders to better understand any significant views expressed in the context of matters voted upon at our annual stockholders’ meetings.

Unless the Board modifies its policy on the frequency of holding “say on pay” advisory votes, the next “say on pay” advisory vote will occur at the 2022 Annual Stockholders’ Meeting.

 

 

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Recommendation of the Board

The Board of Directors recommends that you vote “FOR” approval of the executive compensation of Intel’s listed officers on an advisory basis.

 

 

     

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 Compensation Discussion and Analysis

      
      

 

 

2020 LISTED OFFICERS

 

Robert H. Swan

Former Chief Executive Officer, effective
February 15, 2021

 

George S. Davis

Executive Vice President

Chief Financial Officer

 

Navin Shenoy

Executive Vice President

General Manager, Data Platforms Group

 

Steven R. Rodgers

Executive Vice President

General Counsel

 

Gregory M. Bryant

Executive Vice President

General Manager, Client Computing Group

 

Dr. Venkata S.M. Renduchintala

Former Executive Vice President

Group President, Technology, Systems Architecture and Client Group, and Chief Engineering Officer, effective August 3, 2020

 

    

 

This section of the proxy statement explains how the Compensation Committee of the Board of Directors oversees our executive compensation programs and discusses the compensation earned by Intel’s listed officers, as presented in the tables below under “Executive Compensation.”

 

This Compensation Discussion and Analysis is composed of four sections:

 

§   Executive Summary—Key elements of compensation for our listed officers, including a discussion of our leadership transformation and compensation decisions for our new CEO in 2021, 2020 “say on pay” result, and robust investor engagement;

 

§   2020 Compensation of Our Listed Officers—Details on our executive compensation programs and the individual compensation of our listed officers;

 

§   Update on 2019 Strategic Growth Equity Awards—Details on how the Strategic Growth Equity Awards granted in 2019 are tracking; and

 

§   Other Aspects of Our Executive Compensation Programs—A discussion of our compensation framework, our use of peer group data, and other policies and practices related to our executive compensation programs.

 

Detailed compensation tables that quantify and further explain our listed officers’ compensation follow this Compensation Discussion and Analysis.

Executive Summary

In 2020, the company continued to progress on its multi-year strategic transformation to (i) strengthen our CPU franchise, while evolving into a multi-architecture xPU company, (ii) move from silicon focused to platform focused solutions, including silicon, software, and services, and (iii) contemporize our integrated device manufacturer (IDM) model, to capitalize on key technology inflections and extend our reach into fast-growing markets.

Against this backdrop, 2020 was a year of challenges and opportunities for the company:

 

  §  

Despite the complexity created by the COVID-19 pandemic, the company capitalized on the market dynamics created by a work-from-home environment to deliver a year of record revenue.

 

  §  

The company—in assessing the imperative for Intel to improve process technology execution and accelerate progress on our transformation—took action to reorient the company’s technology organization beginning in mid-2020, and the Board implemented a Chief Executive Officer (CEO) transition in early 2021, hiring Patrick P. Gelsinger. As Intel’s new CEO, Mr. Gelsinger brings unique insights on the company’s technology evolution, as well as an excellent track record of both performance and talent development.

 

  §  

The Board and management remained focused on the cultural transformation necessary to position the company for long-term growth, both by closely monitoring the health and well-being of our highly-skilled global workforce of over 110,000 people during the pandemic and continuing to promote a culture that seeks to advance diversity and inclusion across our global workforce.

Looking ahead, the Board is confident that under Mr. Gelsinger’s leadership, Intel is well-positioned to execute on our strategy, build on our record of product leadership, and capitalize on the significant opportunities ahead to create long-term stockholder value.

 

     

 

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This Executive Summary discusses three aspects of our executive compensation programs for 2020 and 2021, underpinning Intel’s strategic transformation:

 

  §  

The considerations informing Mr. Gelsinger’s new hire compensation as our new CEO, effective February 15, 2021.

 

  §  

The company’s broad stockholder engagement during the past year and actions taken by the Compensation Committee in response to the feedback received—including changes made to the Executive Annual Performance Bonus Plan (Annual Cash Bonus Plan) for plan year 2021 and enhancements made in our proxy statement disclosure.

 

  §  

The compensation paid to the Listed Officers for 2020.

Leadership Transformation

Over the past year, Intel transformed its technology leadership team and implemented a CEO transition to reposition the company for growth.

Technology Leadership Transition

In mid-2020, the company made important changes to our technology organization and executive team in order to accelerate product leadership and improve focus and accountability in process technology execution. The company separated the Technology, Systems Architecture, and Client Group (TSCG) into five teams, whose leaders report directly to Intel’s CEO: Technology Development; Manufacturing and Operations; Design Engineering; Architecture, Software and Graphics; and Supply Chain. In connection with this change, the company determined that Dr. Venkata Renduchintala’s role as Group President, TSCG would be eliminated, effective August 3, 2020. See pages 89 and 103 for details of Dr. Renduchintala’s separation agreement.

Intel named Dr. Ann Kelleher to lead the Technology Development Group and Keyvan Esfarjani to lead the Manufacturing and Operations Group, both of whom bring to their new roles consistent track records of success as long-time leaders at Intel.

The company continued to add highly experienced engineering and executive talent to accelerate Intel’s transformation. In addition to the hiring of Mr. Gelsinger as Intel’s CEO, announced in January (as discussed in the following section), the company added three technology leaders in early 2021:

 

  §  

Sunil Shenoy rejoined Intel to lead the Design Engineering Group. Mr. Shenoy returns to the company as a 33-year Intel veteran and proven engineering leader who has deep experience in microprocessor and system-on-chips design and research and development.

 

  §  

Guido Appenzeller became Chief Technology Officer of the Data Platforms Group. Previously, Mr. Appenzeller served as the Chief Product Officer of Yubico, and as the Chief Technology Officer, Cloud & Networking at VMware.

 

  §  

Glenn Hinton rejoined Intel as Senior Fellow. Mr. Hinton returns to the company as a 34-year Intel veteran, and holds more than 90 patents from eight different CPU designs.

2021 CEO Transition

Patrick P. Gelsinger

In early 2021, the Board of Directors implemented a leadership transition, appointing Mr. Gelsinger as CEO effective February 15, 2021, at which time he also joined the Board.

The Board determined that this was the right time to change company leadership in order to draw on Mr. Gelsinger’s deep technology and engineering expertise during this critical period of transformation at Intel, and to further enhance the company’s ability to attract top-tier engineering talent. Mr. Gelsinger is a former long-term Intel executive and a highly respected technology industry veteran with a distinguished track record of innovation and talent development. He spent the past eight years successfully leading VMware, Inc., another large technology company, where annual revenues nearly tripled and stock price and market capitalization reached all-time highs during his tenure. According to Glassdoor,1 Mr. Gelsinger was ranked #1 CEO in the world in 2019 and received a CEO approval rating of 99%.

Mr. Gelsinger previously spent 30 years in key technology leadership roles at Intel, including serving as Senior Vice President and Co-General Manager of Intel’s Digital Enterprise Group from 2005 to September 2009, serving as Intel’s first-ever Chief Technology Officer from 2002 to 2005, and leading Intel’s Desktop Products Group prior to that. Mr. Gelsinger led the company in developing several key technologies in the industry, including Wi-Fi and USB. He was the architect of the original 80486 processor, led 14 different microprocessor programs, and played key roles in the Core and Xeon families, leading to Intel’s dominance as a supplier of the microprocessor. Mr. Gelsinger holds eight patents in the areas of VLSI design, computer architecture, and communications.

 

1 

Source: see www.glassdoor.com/Award/Top-CEOs-LST_KQ0,8.htm

 

     

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In designing Mr. Gelsinger’s compensation package, the Compensation Committee, advised by its independent compensation consultant, sought to deliver market-competitive compensation commensurate with Mr. Gelsinger’s capabilities and experience and reflective of the considerable challenge of leading Intel’s transformation. Specifically, in determining the size and structure of his one-time new hire equity awards, the Compensation Committee considered the following factors:

 

  §  

The value of Mr. Gelsinger’s compensation with his prior employer that would be forfeited if he returned to Intel, which was estimated to be approximately $50 million based on available information at the time of Mr. Gelsinger’s hiring.

 

  §  

The magnitude of the transformation being undertaken by the company and the need to provide sufficient upside opportunity to a leader with the technological and engineering experience required to successfully execute it.

 

  §  

The importance of creating immediate alignment with Intel’s stockholders.

 

  §  

The fiercely competitive market for a talented, experienced technology executive capable of leading Intel, including the compensation levels evaluated by the Compensation Committee during its prior CEO search process two years ago.

 

  §  

Mr. Gelsinger’s unique skill set and background as a successful public technology company CEO with in-depth knowledge and engineering experience at Intel, having played a central role in developing leading-edge technologies at the company during his prior 30 year tenure.

Based on these considerations, the Compensation Committee determined to offer Mr. Gelsinger one-time new-hire equity awards at a magnitude that would provide sufficient incentive for him to depart his prior position and assume responsibility as CEO at Intel. The Compensation Committee authorized granting Mr. Gelsinger one-time new hire equity awards with a target value of approximately $110 million, with almost 75% of the award’s target value requiring significant stock price appreciation in order for the awards to be earned. In structuring the awards, the Compensation Committee made long-term stockholder value creation the clear focal point of Mr. Gelsinger’s new-hire compensation. Key aspects of these awards are outlined in the chart below and discussed in more detail in the subsequent table.

CEO New Hire Equity Awards

 

 

 

LOGO    Over 94% of total compensation package is equity-based to create immediate alignment with stockholders        LOGO    Of the ~$60M non make-whole portion, $20M vests only if Intel’s stock price triples
LOGO    73% of target value requires substantial value creation to be realized        LOGO    The Compensation Committee considered that Mr. Gelsinger would not receive an annual equity award for 2021, which was targeted at $15.5M for Intel’s CEO in 2019

 

LOGO

  

 

~$50M of $11OM target value provided as make-whole for compensation forfeited from prior employer

      

 

 

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Mr. Gelsinger’s compensation package is predominately performance-based with performance conditions requiring significant increases in Intel’s stock price. The Compensation Committee determined that it was appropriate to condition the ability to earn such awards primarily upon Intel’s stock price performance based on the following considerations:

 

  §  

The company’s experience in recent years demonstrating that strong financial performance did not necessarily translate to stock price appreciation for our stockholders ruled out conditioning a portion of the equity awards on financial performance goals.

 

  §  

Conditioning vesting of awards directly on Intel’s stock price performance, together with three- and five-year service requirements, directly ties compensation to creating and maintaining long-term stockholder value.

Specific terms of Mr. Gelsinger’s one-time new hire equity awards are as follows:

 

         
    Award Type +
Target Award Value
 

Material
Vesting Terms

 

Award Purpose and

Design Considerations

  

Make-  

Whole  

       

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Relative TSR PSUs

 

$20 Million

 

§  Three-year relative TSR award that vests based on our TSR performance relative to the median TSR of the S&P 500 IT Index

 

§  The awards vest at target (100%) for TSR at the median of the Index

 

§  Payout at 0% if Intel’s TSR is 25 percentage points below the Index; payout at 200% of target if Intel’s TSR is 25 percentage points above the Index

 

§  Maximum payout is 200% of target

 

§  Measures three-year performance against the highly relevant and challenging S&P 500 IT Index companies, the same component applicable to a portion of the annual PSUs awarded to other Intel executives

 

§  For historical perspective, median three-year TSR in the S&P 500 IT Index through year-end 2018, 2019, and 2020, respectively, was 57.6%, 108.0%, and 115.6%

 

§  Strong execution and value creation is required for a target payout, which is an ambitious target given that the 2018 Outperformance Stock Units that vested based on Intel’s relative TSR for the 2018 to 2021 performance period paid out at 0%

 

§  Also replaces in part the value of unvested equity awards Mr. Gelsinger forfeited upon his departure from his prior employer

 

  

 

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Strategic Growth Equity Award Performance Stock Units

 

$20 Million

 

 

§  Five-year performance period

 

§  Vesting based on stock price appreciation:

 

§  Threshold: 50% vests for 30% stock price growth

 

§  Target: 100% vests for 50% stock growth

 

§  Maximum: 200% vests for 100% stock price growth

 

§  Stock price goals must be maintained for 30 consecutive trading days. In addition, awards are capped at target payout if the threshold goal is not maintained for the 30 consecutive trading days at the end of the five-year performance period

 

§  50% of vested shares distributed upon satisfying three-year continued service condition and remaining vested shares distributed upon satisfying five-year continued service condition

 

 

 

§  Incentivizes long-term stock price appreciation, with the ambitious goal of doubling the value of the company (corresponding with a $203 billion increase in market cap) in order to achieve maximum value of the award, while encouraging retention with the service-based vesting schedule

 

§  Serves to align Mr. Gelsinger’s compensation package with the other Intel executives who in 2019 received Strategic Growth Equity Award PSUs by tying vesting to similarly rigorous requirements for stock price appreciation; the similar awards granted in 2019 have completed two years of the five-year performance period with zero vesting to date

 

    

 

     

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Table of Contents
         
    Award Type +
Target Award Value
 

Material

Vesting Terms

 

Award Purpose and

Design Considerations

  

Make-  

Whole  

       

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Strategic Growth Equity Award Performance Stock Options

 

$20 Million