Intel's Performance-Based RSU Structure
Intel is reportedly granting performance-based RSUs to engineers, not just executives, based on their level within the company. Details on the vesting schedules and liquidity for these grants are not widely publicized, but tech workers are sharing specifics in online forums like Reddit, providing a window into how some Big Tech firms are structuring non-guaranteed equity.
Intel's standard practice for executives involves Performance Stock Units (PSUs), a form of RSU where the final number of shares awarded can range from 0% to 200% of the target. This payout is determined by metrics such as Relative Total Shareholder Return (rTSR) and Earnings Per Share (EPS) growth over a three-year period. For senior leaders, these performance-based awards can constitute a significant portion of their overall compensation, with splits like 60% PSUs and 40% time-based RSUs for some, and an even heavier 80/20 split for top executives. While detailed public information is scarce, discussions among tech employees in online forums suggest a similar performance-based structure may be in place for engineers, not just executives. This aligns with a broader industry trend where companies are increasingly tying a portion of non-guaranteed equity to performance goals to incentivize and reward contributions more directly. Intel has also utilized "Outperformance Stock Units" (OSUs) for senior employees, which pay out based on Intel's total shareholder return compared to the S&P 500 IT index over a three-year period. These OSUs have a 4x multiplier, meaning a 10% outperformance results in a 40% increase in vested shares, capped at 200% of the target grant. Conversely, underperformance can reduce the vested amount, with a 25% underperformance resulting in zero shares vesting. This move towards performance-based equity for a broader range of employees comes as total compensation for software engineers at major tech firms continues to be heavily influenced by stock awards. For senior engineers at top-tier companies, equity can often exceed their base salary. This makes the structure and performance multipliers of such grants a critical factor in the overall attractiveness of a compensation package. For new graduates and early-career engineers, understanding the mechanics of these equity grants is crucial for evaluating job offers. While a higher base salary might be tempting, a robust performance-based RSU package at a company with strong growth potential could lead to significantly higher total compensation over the vesting period. The tax implications are also a key consideration, as vested RSUs are taxed as ordinary income in the year they vest.
