Intel’s CEO Pay and Incentive Plan: A High-Stakes Gamble on Turnaround

Intel’s shareholders have placed their bets on a bold new leadership vision. At its 2025 annual meeting, the company secured approval for its equity incentive plan and a $69 million compensation package for its new CEO, Lip-Bu Tan, signaling a critical shift in strategy. Yet with the stock down 36% over the past year, investors are asking whether this gamble will pay off—or if Intel’s struggles in an increasingly competitive tech landscape are too deep to reverse.

The CEO’s Pay: A Performance-Driven Deal
Tan’s compensation package, which includes a $1 million base salary, a $2 million bonus, and $66 million in equity grants and stock options, is heavily tied to Intel’s future performance. A staggering $42 million of his award is contingent on share price growth, aligning his incentives with long-term shareholder returns. This structure reflects a stark departure from his predecessor Pat Gelsinger’s tenure, during which costly missteps like the failed 18A chip manufacturing process fueled skepticism about leadership decisions.

Equity Incentive Plan: Retaining Talent Amid Restructuring
The equity incentive plan, aimed at retaining employees through stock reserves, comes as Tan undertakes a sweeping overhaul. He has already flattened hierarchies, cut middle management, and refocused Intel on AI and manufacturing. The strategy is clear: leverage Intel’s dominance in PC and data center chips to build a stronger foothold in the AI boom, while reviving its manufacturing prowess. Tan’s partnerships, such as integrating Gaudi 3 AI accelerators via IBM Cloud, signal a pivot toward collaboration over costly solo bets.

Shareholder Reactions: A Vote of Confidence, But Risks Remain
While shareholders approved the board of directors and compensation, three proposals were rejected: one to reassess Israeli operations, another mandating charitable reporting, and a third seeking written consent rights. This suggests investors are focused on operational changes rather than geopolitical or governance minutiae. Yet the stock’s 1.6% decline during the meeting underscores lingering doubts.

The Bigger Picture: Can Intel Regain Its Edge?
Intel’s struggles are no secret. The 36% annual stock drop reflects concerns over competition from AMD and NVIDIA in CPUs and GPUs, as well as China’s chip ambitions. Tan’s AI and manufacturing bets are high-risk, high-reward. Success hinges on executing partnerships and proving Intel can innovate in AI hardware without repeating past manufacturing misfires.

The $42 million performance-based portion of Tan’s pay highlights the stakes: his rewards depend on turning around the stock. If Intel’s shares rise, shareholders gain; if not, Tan’s pay could shrink. This alignment is a positive sign, but execution remains key.

Conclusion: A Turnaround Hinges on Execution
Intel’s future is now tied to Tan’s ability to deliver on AI and manufacturing. With 42% of his pay performance-linked, his interests are aligned with investors’. However, the stock’s 36% annual decline and flat year-to-date performance show skepticism persists.

The numbers tell the story: If Intel can grow its AI revenue (currently a small fraction of sales) to rival rivals like NVIDIA and stabilize manufacturing, the equity incentives could pay off handsomely. But if execution falters, shareholders may rue their bet.

For now, the approval of Tan’s plan signals a willingness to back bold leadership. Investors will watch closely as Intel races to prove it can innovate in a market where failure is no longer an option.

In the end, this is a high-stakes experiment. Tan’s compensation structure may be the carrot, but the stick—Intel’s fading relevance—looms larger than ever.