8-KMaterial Agreements

INTEL CORP 8-K Report, Material Agreement (Apr 2, 2009)

Filed April 2, 2009For Securities:INTC

Summary

Intel Corporation announced on March 27, 2009, through its Compensation Committee, the terms for granting new performance-based restricted stock units, termed Outperformance Share Units (OSUs), to its executive officers. These OSUs are designed to align executive compensation with the company's relative stock performance compared to a defined peer group. The structure incentivizes executives to outperform both the technology sector and the broader S&P 100. The OSUs will vest three years and one month after the grant date, with the number of shares ultimately received per OSU dependent on Intel's Total Shareholder Return (TSR) relative to a composite benchmark. This benchmark combines the performance of 15 technology companies (Tech 15) and the S&P 100. While a target conversion is one share per OSU, performance below the benchmark will reduce this, and outperformance can increase it, with a cap of two shares per OSU. Dividend equivalents will also be paid out in shares, but only if the OSUs vest. This mechanism provides a clear link between executive rewards and shareholder value creation over a multi-year period.

Key Highlights

  • 1Intel's Compensation Committee approved terms for "Outperformance Share Units" (OSUs) for executive officers.
  • 2OSUs are performance-based restricted stock units designed to align executive pay with relative stock performance.
  • 3Vesting period for OSUs is three years and one month from the grant date.
  • 4The number of shares received per OSU depends on Intel's Total Shareholder Return (TSR) relative to a composite benchmark (Tech 15 and S&P 100).
  • 5A target of 1 OSU converts to 1 share of Intel stock, with adjustments based on relative performance.
  • 6Outperformance can result in up to 2 shares per OSU, while underperformance reduces the conversion rate.
  • 7Dividend equivalents accrue but are only paid in shares to the extent OSUs vest.

Frequently Asked Questions

Outperformance Share Units (OSUs) are a form of performance-based restricted stock units approved for Intel's executive officers. They are designed so that the number of Intel shares an executive ultimately receives depends on the company's stock performance relative to a specific benchmark over a defined period.

Intel's performance is measured by its Total Shareholder Return (TSR), which includes share price appreciation and dividends paid over the performance period. This TSR is then compared against a benchmark that averages the TSR of 15 technology companies (Tech 15) and the S&P 100 index.

OSUs generally vest three years and one month after the grant date. The number of shares received per OSU is tied to Intel's relative performance. The target is one share per OSU. If Intel underperforms the benchmark, the conversion rate decreases (e.g., 0.8 shares for a 10 percentage point underperformance). If Intel outperforms, the conversion rate increases, but it is capped at a maximum of two shares per OSU.

Yes, dividend equivalents accrue over the performance period. However, they are only paid out in the form of Intel stock to the extent that the OSUs vest based on the company's performance at the end of the performance period.