Exhibit 10.2

 

Description of Bonus Terms under the Executive Officer Incentive Plan (EOIP)

 

The Executive Officer Incentive Plan is an annual bonus program administered by
the Compensation Committee (the “Committee”) of the Board of Directors. Terms of
potential bonuses are established by the Committee early in each fiscal year
(typically, in January), and are communicated to participating executives, but
are not documented through a formal agreement with the executives. A description
of the bonus arrangements under the EOIP is set forth below.

 

An executive’s potential bonus under the EOIP equals the individual’s incentive
target multiplied by Intel’s EPS for the year and by a factor pre-established
each year by the Committee (the “Performance Factor”), all of which are further
explained below. The Committee designates the executives who are eligible to
receive a bonus under the EOIP, each such individual’s incentive target amount
and the Performance Factor for the year. At the end of each year, after the
individual amounts payable under this formula are calculated, the Committee has
the discretion to reduce (but not increase) a participant’s incentive payment.
The EOIP does not specify criteria that the Committee must use in exercising its
discretion to reduce EOIP payments, and it also does not require the Committee
to make any reductions.

 

For purposes of the EOIP formula, EPS is the greater of (x) Intel’s operating
income or (y) Intel’s net income divided by Intel’s weighted average common and
common equivalent shares outstanding. Both operating income per share and
adjusted net income per share are not defined under generally accepted
accounting principles and are not deemed alternatives to measure performance
under GAAP. The Committee may adjust Intel’s operating income or Intel’s net
income based on objective criteria selected by the Committee in its sole
discretion and in conformity with IRS regulations. These adjustments may
include, but are not limited to: asset write-downs; litigation; claim judgments,
settlements or tax settlements; the effects of tax law changes, changes in
accounting principles or other such laws or provisions affecting reported
results; accruals for reorganization and restructuring programs; unrealized
gains or losses on investments; and any extraordinary non-recurring items as
described in Accounting Principles Board Opinion No. 30 and/or in management’s
discussion and analysis of financial condition and results of operations
appearing in Intel’s annual report to stockholders for the applicable year.
Operating income does not include gains or losses on equity securities or
interest and other income earned by Intel, and does not include a deduction for
interest expense and income taxes; as a result, EPS based on operating income
generally exceeds EPS based on net income. The Performance Factor applied to EPS
as mentioned above is a predetermined factor that considers market
competitiveness of the participants’ base salary and incentive target amounts,
forecasted EPS growth and performance probability, with the purpose of setting
challenging employee performance expectations.