Intel CEO Otellini gets US$12.4 million in '08

Package includes stock options and awards worth an estimated US$7.2 million at the time they were granted.

Intel president and CEO Paul Otellini was awarded a compensation package valued at US$12.4 million in 2008, according to documents filed with the U.S. Securities and Exchange Commission.

His compensation includes a $1 million salary, $3.9 million performance-based bonus, and $309,600 in perks and other compensation. Otellini also received stock and option awards valued at $7.2 million at the time they were granted.

Overall, Otellini's 2008 compensation is up slightly from 2007, when his pay package was valued at $12.3 million.

The company, meanwhile, saw revenue fall 2% and net income drop 24% in its fiscal year ended Dec. 31. Intel posted revenue of $37.6 billion, down from $38.3 billion in 2007. Net income came in at $5.3 billion, down from $7 billion the year earlier.

Intel on Monday also announced a company-wide salary freeze in an effort to reduce spending and control costs.

In addition, Intel disclosed plans for a stock option exchange program that would give employees the opportunity to exchange previously granted, underwater options for a fewer number of new options at the current market price. Intel will seek stockholder approval in May for the exchange program.

Intel indicated that more than 99% of outstanding stock options are underwater -- which means that the exercise price (the price at which the stock can be purchased once vested) is higher than Intel's current stock price.

"Many employees hold a significant amount of stock options that are both underwater and approaching expiration. As a result, these stock options have not delivered the value to employees we intended to provide at the time they were granted," the company said in a Q&A prepared for managers and filed with the SEC. "If approved, the stock option exchange program will allow us to address this issue, and increase the motivational and retention value of our stock program with no increase in cost to the company."

Otellini's total pay is calculated using data supplied in a preliminary proxy statement filed with the SEC on March 23. The following figures are taken from the summary compensation table: salary, bonus, non-equity incentive plan compensation and all other compensation (perks). Added to those figures is the estimated value of stock options and awards granted during the year; that figure is taken from the table that summarizes grants of plan-based awards. The calculations don't include changes in the values of retention plan and pension benefits.