Intel Chief’s Stock Options, Bonus Soar as Earnings Jump

Intel Corp. Chief Executive Craig Barrett’s bonus jumped 41% in 2003, though his salary remained unchanged from the previous year, according to a regulatory filing released Wednesday.

Barrett earned $610,000 in salary and $1.5 million in bonuses in 2003, when the chip-making giant’s profit jumped 81% to $5.6 billion and sales increased more than 12% to $30.1 billion.

He received 1.35 million stock options, more than double the 584,000 he was granted the previous year. Of those, 1 million were part of a long-term award that won’t be exercisable until 2009.

“The bonus is up because earnings per share was up and our business groups met their goals for the most part,” Intel spokesman Bill Calder said. “Barrett received an additional bonus this year. Why? Because the company was performing. Everyone benefited. The whole boat got raised.”

In the filing, Intel also said it would ask its stockholders to approve a new stock option plan that would replace the two currently in place. Under the proposal, shareholders would vote on whether to continue the plan every year, starting in 2005.

The new options plan would allow for other forms of equity compensation besides stock options. However, the company said it did not intend at this time to offer alternatives such as restricted stock awards, Calder said.

Unlike the existing plans, which generally set a 10-year term for exercising most options, the new system would reduce the term to seven years. In addition, Intel could not re-price options if they became worthless because its market share price dropped.

Options have become a source of controversy in recent years, in large part because companies haven’t been required to charge the cost of option grants against earnings.

On Wednesday, the Financial Accounting Standards Board unveiled a proposed rule that would require companies to record as a compensation expense all forms of share-based payments to employees, including options. Intel has strongly opposed the idea.

Intel shares fell 23 cents to $27.20 on Nasdaq.