Robert H. Swan Equity Awards
Robert H. Swan remained our CEO until February 15, 2021. As described on page 70 of the 2021 Proxy Statement, in connection with his termination of employment without cause when he was retirement eligible under our equity program, Mr. Swan received or is eligible to receive certain benefits under his existing arrangements, and in particular, Mr. Swan received accelerated vesting of his interim CEO RSUs and PSUs, his annual PSUs, and his cash incentive-related PSUs. For most of these PSU awards, Mr. Swan remains eligible to receive a payout based on actual performance of the applicable performance goals at the end of the applicable performance periods. As discussed on pages 70 and 105 of the 2021 Proxy Statement, these performance goals have not changed in connection with Mr. Swan’s termination and are set forth in existing arrangements. Because the awards were not modified and there were no new grants to Mr. Swan in connection with his termination, there was not a new “grant date fair value” determination in connection with Mr. Swan’s termination.
Page 105 of the 2021 Proxy Statement describes the target values of Mr. Swan’s remaining equity awards. These target values are different from the grant date fair value of these awards under ASC Topic 718. The grant date fair value of these awards is set forth in the Summary Compensation Table for the years in which the awards were granted, and the related compensation tables, notes, and narrative in the proxy statements for those years. As stated on page 105 of the 2021 Proxy Statement, the target values of the remaining equity awards as of Mr. Swan’s termination date were derived using the closing Intel stock price on February 12, 2021 ($61.81), because the market was closed on Mr. Swan’s termination date of February 15, 2021.
Accounting Treatment
We treat the expense of equity awards in accordance with U.S. generally accepted accounting principles and ASC Topic 718, including with respect to the reversibility of the expense in the event a “performance condition” or a “market condition” within the meaning of ASC Topic 718 is not achieved. As indicated on page 94 of the 2021 Proxy Statement, compensation expense for awards with a performance condition, or for components of awards with a performance condition, is determined in accordance with ASC Topic 718 and is in part based on if and when the company determines that it is probable that the performance condition will be achieved. All or a portion of such expense may be reversed if it is determined that such achievement is no longer probable, while the probable outcome is not considered, and is not the basis for a reversal of expense, for awards or components of awards with a market condition.
The performance-based equity awards granted to Mr. Gelsinger and described in the “Compensation Discussion and Analysis” section of the 2021 Proxy Statement have only “market conditions” within the meaning of ASC Topic 718.
Of the equity awards granted to Mr. Swan and described on page 105 of the 2021 Proxy Statement, within the meaning of ASC Topic 718: (i) the Annual PSUs and Promotion PSUs have a 50% “performance condition” component and a 50% “market condition” component, (ii) the Annual RSUs and Promotion RSUs have only “service conditions,” (iii) the Strategic Growth Equity Awards have only “market conditions,” and (iv) the Cash Incentive-Related PSUs have only “performance conditions.”
The timing of expense recognition of equity awards differs from when such equity awards are reported under the SEC’s rules for executive compensation disclosure, and the expense recognized differs from the amount and value of equity awards that may actually be realized by Intel’s executive officers, and in some cases differs from the value of equity awards as reported under the SEC’s rules.
