Intel 2004 Annual Report Download - page 21

Table of Contents
On November 11, 2004, the company announced that the Board of Directors elected Paul S. Otellini as President and Chief Executive
Officer, and Craig R. Barrett as Chairman of the Board, effective as of completion of the Annual Stockholders’ Meeting scheduled for May
2005. Andrew S. Grove will not stand for reelection as a director at the May Annual Stockholders’ Meeting.
Corporate Governance
Corporate governance is typically defined as the system that allocates duties and authority among a company’s stockholders, board of
directors and management. The stockholders elect the board and vote on extraordinary matters; the board is the company’s governing body,
responsible for hiring, overseeing and evaluating management, particularly the Chief Executive Officer (CEO); and management runs the
company’s day-to-day operations. The Board believes that there should be a substantial majority of independent directors on the Board. The
Board also believes that it is useful and appropriate to have members of management, including the Chief Executive Officer, as directors.
The Board’s general policy, based on experience, is that the positions of Chairman of the Board and Chief Executive Officer should be
held by separate persons to aid in the Board’s oversight of management. In addition, the Board has an independent director designated as the
Lead Independent Director, who is responsible for coordinating the activities of the other independent directors and performs various other
duties. The general authority and responsibilities of the Lead Independent Director are established in a written charter adopted by the Board.
The current Board members include eight independent directors and three members of Intel’s senior management. The Board members
are Craig R. Barrett, Intel’s Chief Executive Officer; Ambassador Charlene Barshefsky, Senior International Partner at the Wilmer Cutler
Pickering Hale and Dorr LLP law firm; E. John P. Browne, Group Chief Executive of BP plc; Andrew S. Grove, Intel’s Chairman of the
Board; D. James Guzy, Chairman of Arbor Company; Reed E. Hundt, Principal, Charles Ross Partners; Paul S. Otellini, Intel’s President and
Chief Operating Officer; David S. Pottruck, Managing Director, The Pottruck Group; Jane E. Shaw, Chairman and Chief Executive Officer of
Aerogen, Inc.; John L. Thornton, Professor and Director of Global Leadership at Tsinghua University, Beijing, China; and David B. Yoffie,
Professor of International Business Administration, Harvard Business School. The Board also has one Director Emeritus, Gordon E. Moore,
who may participate in Board meetings but does not vote.
Director Vacancy in 2005. In November 2004, Intel announced that Andrew S. Grove, Chairman of the Board, would not stand for
reelection in May 2005; that Craig R. Barrett would succeed Dr. Grove as Chairman effective following the 2005 Annual Meeting; and that
Paul S. Otellini would succeed Dr. Barrett as Chief Executive Officer at the same time. The Board presently expects to keep the total number of
directors at 11, and the Board’s Corporate Governance and Nominating Committee is considering possible candidates for the Board seat to be
vacated by Dr. Grove. The Board has not yet chosen a candidate, and if it has not done so prior to distribution of the Proxy Statement for Intel’
s
2005 Annual Stockholders’ Meeting, the Board may act to temporarily reduce the size of the Board to 10 directors effective with the Annual
Meeting. In that circumstance, it is the expectation of the Board that it will identify a director candidate later in 2005 and that the Board will act
to expand the Board again to 11 directors at that time and to elect that person to the Board. The company will make a public announcement if
and when that event occurs.
“Independent” Directors. Each of the company’s directors other than Messrs. Grove, Barrett and Otellini qualify as “independent” in
accordance with the published listing requirements of The NASDAQ Stock Market (NASDAQ)*. The NASDAQ independence definition
includes a series of objective tests, such as that the director is not an employee of the company and has not engaged in various types of business
dealings with the company. In addition, as further required by the NASDAQ rules, the Board of Directors has made an affirmative
determination as to each independent director that no relationships exist which, in the opinion of the Board, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director. In making these determinations, the Board reviewed and discussed
information provided by the directors and the company with regard to each director’
s business and personal activities as they may relate to Intel
and Intel’s management.
In addition, the members of the Audit Committee of the Board also each qualify as “independent” under special standards established by
the U.S. Securities and Exchange Commission (SEC) for members of audit committees, and the Audit Committee includes at least one member
who is determined by the Board to meet the qualifications of an “audit committee financial expert” in accordance with SEC rules, including
that the person meets the relevant definition of an “independent” director. E. John P. Browne is the independent director who has been
determined to be an audit committee financial expert. Stockholders should understand that this designation is a disclosure requirement of the
SEC related to Mr. Browne’s experience and understanding with respect to certain accounting and auditing matters. The designation does not
impose on Mr. Browne any duties, obligations or liability that are greater than are generally imposed on him as a member of the Audit
Committee and Board of Directors, and his designation as an audit committee financial expert pursuant to this SEC requirement does not affect
the duties, obligations or liability of any other member of the Audit Committee or Board of Directors.
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