In a letter to shareholders this week, and a filing with the Securities and Exchange Commission, Intel announced an overhaul of its executive compensation practices.

“Our goal is for executive compensation to be well aligned with stockholders' interests, and the company is firm in its commitment to using executive compensation programs that are equitable and closely connected to the company's performance,” the letter says.

After a yearlong review, the company will make a numerous changes compensation structure for both executives and the broader employee base. “These changes are designed to help drive positive business results by further increasing accountability and enhancing the link between individual pay and company performance,” Intel says.

Highlights of the new compensation strategy, and steps already taken, include:

In 2012, Intel made retention equity grants to top executives in conjunction with a CEO transition. These grants were intended to be a one-time event, and there were no retention grants in 2013. The company says it does not anticipate the need to use this tool in the foreseeable future.

When Brian Krzanich was appointed CEO in May 2013 the Board's Compensation Committee approved a compensation package at approximately the 25th percentile relative to peer company CEOs, and well below former CEO Paul Otellini's compensation.

Equity grants will have more downside risk. Performance-based equity awards for senior executive officers no longer have a “floor” value. If relative Total Shareholder Return over a three-year period falls below threshold levels, the payout will be zero. There is no change to the maximum potential value of these awards.

Beginning in 2014, stock ownership guidelines have been extended to approximately 350 of Intel's senior leaders.

The annual cash bonus program has been redesigned for all employees, with greater emphasis on a short list of critical operational objectives in an effort to enhance accountability and the link between pay and performance.

Approximately 90 percent of total direct compensation for Named Executive Officers at Intel in 2014 is performance-based, consisting of 65 percent equity, 24 percent annual cash bonus and 1 percent profit-sharing, the letter says. Only 10 percent of that compensation, in the form of base salary, is fixed, “ensuring a strong link between an individual's total compensation and the company and business unit results.”