New Intel CEO Bob Swan could make $138 million in salary and stock compensation if the company hits its most ambitious targets (INTC)

Intel CEO Bob Swan

New Intel CEO Bob Swan is set to receive about $20 million each year — a massive compensation package compared to his peers.
The catch is, a lot of his compensation is tied to performance of Intel and its stock.
If everything goes really right for Intel, Swan could make as much as $138.3 million, if not more.

Intel handed the CEO reins to Bob Swan this week, ending a six month search to fill the top job that Swan had initially, according to reports, said he wasn't interested in.

It's unclear what prompted the change of heart. But a close look at Swan's compensation package probably didn't hurt.

Swan, who previously served as Intel's head of finance, is receiving a massive compensation package for his new gig— although much of it is tied to company performance. We did some napkin math to speculate on how much Swan could make, in an absolute best-case scenario, from the pay package granted to him at the time of taking the new job. And it comes out to a staggering $138.3 million.

In his new role, Swan will receive an annual compensation package valued at about $20 million. In comparison, the median annual compensation for the CEOs 500 largest U.S. traded companies is $11.9 million, according to data from Equilar. Intel had no comments to add beyond the company filing.

The compensation package in question includes $1.25 million in base salary, $3.4 million in cash bonuses, and $15.5 million in equity awards. 80% of those equity awards are tied to the company's performance, and the remainder will come to him over time. He'll also get an additional one-time payout of $2.7 million for his time as interim CEO.

Importantly, the $3.4 million bonus figure isn't set in stone. Rather, it's a target number, set at 275% of his base salary. Under Intel's Executive Officer Incentive Plan, that rate could go up a little bit, depending on the company's performance: From 2013 to 2017, the CEO of Intel saw an average bonus of 3% over the original target, according to analysis by Equilar. If that pattern holds, Swan will get $3.54 million, instead of the quoted $3.4 million.

In 2017, the last full year that Intel had a CEO, however, the bonus came out 16% ahead of targets. If Intel hits its marks in 2019 to the same degree, Swan's bonus will be nearly $4 million.

Besides this cash bonus, Swan will receive a one-time payout of $13 million in stock units, which will vest on the second and third anniversaries of stepping into the CEO role. INTC

He's also getting a target 450,000 Intel stock units, worth some $32.1 million based on estimates from Equilar, which will vest over 5 years — but he only gets this amount of shares if Intel's stock prices rise 50%. If Intel's stock price sees a 100% increase at some point over the next five years, Swan will be eligible to get 900,000 shares, instead.

So, assuming that Intel's stock does see a 100% increase, from $47.54 on Wednesday to $95.08 at some point, and Swan gets his 900,000 shares, this equity grant would be valued at some $85.6 million, according to Equilar.

Intel's stock was trading 18% below its 52-week high at Thursday's closing price, so there's room for growth. That said, Intel's stock is way up from its historical range over the past five years.

If everything goes right, Intel's new CEO will get a stunning windfall

Swan also has the option to purchase 1.8 million Intel shares at Friday's closing price — but only if the stock prices increased by 30% going forward. Equilar estimates the value of those options to be $16.3 million.

The bottom line: If you assume that Swan gets his salary, his $3.4 million bonus, the target 450,000 shares granted, and that he purchases all 1.8 million Intel shares, the package would be worth an estimated $84.3 million — though that could change depending on the price of Intel stock, since each share would be worth more or less.

But if you assume everything goes really right, and that his bonus is 16% higher than the target and that he earns 900,000 shares instead of 450,000, this package could come out to $138.3 million. That would go up even higher, depending on the bonus amount awarded to him by the board, and just how high Intel's stock price would get.

Of course, that hinges on Intel hitting all of its most ambitious targets, so Swan has his work cut out for him.

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