Executive Summary

Intel's compensation programs are designed to support our business goals and promote the short- and long-term profitable growth of the company. Intel's equity plans are designed to ensure that executive compensation programs and practices are aligned with the long-term interests of Intel's stockholders. Total compensation of each individual varies with individual performance and Intel's performance in achieving financial and non-financial objectives.

The committee and Intel's management believe that compensation should help to recruit, retain, and motivate the employees that the company will depend on for current and future success. The committee and Intel's management also believe that the proportion of at-risk, performance-based compensation should rise as an employee's level of responsibility increases. Intel's compensation philosophy is reflected in the following key design priorities that govern compensation decisions:

alignment with stockholders' interests;
pay for performance;
employee recruitment, retention, and motivation;
cost and dilution management; and
egalitarianism.

Intel employees, including executive officers, are employed at will, without employment agreements, severance payment arrangements (except as required by local law), or payment arrangements that would be triggered by a "change in control" of Intel. Retirement plan programs are broad-based; Intel does not provide special retirement plans or benefits solely for executive officers.

The committee believes that the majority of the executive officers' total compensation should consist of equity awards, which are longer term incentive compensation, rather than cash, which is typically tied to shorter term performance. This view aligns the interests of executive officers with the interests of stockholders. We use the following descriptive categories in this "Compensation Discussion and Analysis" section:

Total cash compensation refers to base salary plus performance-based cash compensation.
Performance-based cash compensation includes annual and semiannual incentive cash payments.
Equity awards include stock options and RSUs, both of which may be granted as annual or long-term awards with time-based vesting.
Performance-based compensation refers to performance-based cash compensation and equity awards (with time-based vesting).
Total compensation refers to base salary, performance-based cash compensation, and equity awards (note that this formulation differs from that in the Summary Compensation table).

Compensation for the majority of Intel's employees located in the United States, including executive officers, consists of the elements identified in the following table.

Compensation Element	Objective	Key Features

Base Salaries	To provide a minimum, fixed level of cash compensation for the executive officers	Targeted at the 25th percentile of our peer group on average, since we strive to have the majority of executive officer pay at-risk and tied to company performance Adjustments are based on an individual's current and expected future performance and pay relative to the market
Performance-Based Cash Compensation	To encourage and reward executive officers' contributions in producing strong financial and operational results	Annual incentive cash payments are based on a formula that includes relative and absolute net income growth, company performance to operational goals, and an individual performance adjustment Semiannual incentive cash payments are based on pretax margin or net income, plus customer satisfaction goals Total cash compensation (base salary plus performance-based cash compensation) is targeted at the 65th percentile of the peer group on average (actual percentile will vary based on annual performance)
Equity Awards	To retain executive officers and align their interests with those of stockholders	Targeted at the 65th percentile of our peer group on average when an executive officer receives annual and long-term stock options and RSU grants Majority of listed officers' total compensation comes in the form of stock options that return value to the executive officer only if our stock price appreciates Annual equity awards generally vest in 25% annual installments over four years Long-term equity awards generally vest in full on the fifth anniversary of the grant date
Stock Purchase Plan	To encourage executive officer stock ownership, further aligning their interests with those of stockholders	Broad-based program under which employees, including executive officers, can purchase up to $25,000 in market value of Intel stock at a 15% discount to the market price
Profit Sharing Retirement Plan	To provide a minimum level of retirement income for the executive officers	Broad-based plan under which Intel makes profit sharing contributions (a percentage of eligible salary and performance-based cash compensation) up to the tax code limit Intel's contributions vest in 20% annual increments after two years of service, completely vesting after six years
Deferred Compensation Plan	To provide retirement savings in a tax-efficient manner	Any profit sharing contributions exceeding the tax code limit are added to the executive officer's deferred compensation account Executive officers can elect to defer their base salaries and annual incentive cash payments