Good morning. My name is Andy Bryant, Chairman of the Board, and I would like to begin by calling the meeting to order. It's a pleasure to welcome you to the Intel 2004 annual shareholders meeting. In addition to being in Santa Clara, the meeting is being conducted via the internet through our investor relations website, www.intc.com. We have three proposals here today. We are here to elect directors for the coming year, to vote on the selection of Intel's auditors, and to hold an advisory vote on executive compensation. The polls are now open for anyone wishing to vote and will remain open until nine o'clock. We will also have our CEO report on the status of the business and a question and answer session. We will take questions both from the live audience and from the internet.
Refer to the printed program for the agenda, and for the rules of the meeting. Cary Klafter, our Corporate Secretary, serves as secretary of the meeting as well, and will take care of formalities.
Okay. Thank you, Andy. I chose the music this morning. I have a pretty short playlist. We began to distribute our notice of meeting and proxy statement on April 3rd this year. March 24th was our record date, which means you had to own shares on March 24 to be able to vote at this meeting. There are approximately five billion shares of Intel common stock outstanding, and approximately 4.1 billion shares are present either in person or by proxy. That represents about 83% of outstanding shares, is sufficient for a quorum so that we can actually hold the meeting today. If you've already voted in any way, by mail, internet, by telephone, you don't have to do anything further here at the meeting. If you want to change your vote or you haven't yet voted, we have the opportunity for you to vote out in the hallway.
Our Inspector of Elections, Jim Raitt from American Election Services, is here, and he'll be able to assist you in that regard. As Andy said, the polls close at nine o'clock. If you haven't voted and you want to vote, please vote by that time. Finally, this is the high point for securities lawyers every year, I get to read the risk factors. Some of today's presentations, including our CEO's business update, contain forward-looking statements. All statements made during the annual meeting that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially.
Please refer to our recent Q1 earnings release, our Form 10-K, and our most recent Form 10-Q for more information on the risk factors that could cause actual results to differ. If we use any non-GAAP financial measures during the presentation, you'll find on our website, www.intc.com, the required reconciliation to the most directly comparable GAAP financial measure. With that, let me turn the meeting back to Andy.
Thanks, Cary. On behalf of the board, I'd like to thank the stockholders who returned their proxies and who are here to vote today in person. We have three items to deal with. Our first proposal today is for election of the 10 directors. Each nominee must receive a majority of the votes cast with respect to that nominee to be elected as a director. I would now like to introduce our nominees. I would ask that you stand and remain standing until all introductions of the directors. First, our CEO, Brian Krzanich. Charlene Barshefsky, Senior International Partner at the law firm WilmerHale. Susan Decker, Principal of Deck3 Ventures. Reed Hundt, Principal of REH Advisors. James Plummer, Professor of Electrical Engineering and Dean of the School of Engineering at Stanford University. Frank Yeary, Executive Chairman, CamberView Partners. David Yoffie, Professor at Harvard University's Graduate School of Business Administration.
Myself, Andy Bryant, your Chairman. Two directors were unable to be here today, David Pottruck and John Donahoe, CEO of eBay. Thank you. There were no other nominations submitted in accord with the bylaw requirements, so nominations are closed. The second matter today is ratification of Intel's external auditors, Ernst & Young. As the independent auditor, I would like to introduce the heads of the audit team here today. It's Mark Borsos and Matt Sapp from Ernst & Young. The last item on the agenda is an advisory vote to approve executive compensation, also known as say-on-pay. We are asking stockholders to approve on an advisory basis the compensation of Intel's listed officers as described in the proxy statement.
We have a long history of strong pay for performance alignment and believe that our compensation decisions in support of our succession planning process were in the best interest of stockholders. While this is an advisory vote to executive compensation, the board and the compensation committee will carefully assess the results and will consult directly with stockholders to better understand any issues that are concerns raised through the shareholder vote. With that, I would like now to call Brian to the stage to do our business update.
Good morning. This is my second shareholder meeting, and my first after a year of Renée and I being in the office. I'd like to welcome everybody here in the auditorium and on the web as well. We're going to try and standardize these a bit so that every year you can come back and get some sense for what we said we would do last year and what we actually feel like we accomplished during the year. Also taking a look at what we project for the following year as well. We'll have a more standard format for this moving forward. If we take a look at last year, I'd classify it as we hit the numbers we said we would hit. $52.7 billion in revenue, gross margin of just under 60%, generating about $21 billion from cash.
I think another important one is on the right there, 3.5% is our dividend yield. That was the average dividend yield, again, as the stock price shifts. One that's very important to us is, if you take a look, we took a look over the last decade, we've given back through that approximately $87 billion to our shareholders. That is really our methodology of sharing those profits back to the shareholders through the dividend yield. If you take a look at what we said we would do back at the last shareholder meeting, we said we would really do four key initiatives. The first one was drive PC innovation. PCs are still the core of our business, and you saw us move 2-in-1s, and we'll go through a little bit on each one of these.
You saw us really move 2-in-1 devices, thin and light, all-in-one desktop devices, and we'll talk a little bit about PC innovation that was done. We said we would aggressively move into ultra-mobile, and actually, as we went through the year, we set a target for 2014 of selling 40 million tablets, so we'll talk about that. We said we wanted to go accelerate the data center growth and then continue our silicon leadership. The core of Intel, we continue to believe, is our Moore's Law leadership. We'll talk a little bit about that as well. Let's talk about the PC. We really feel good about the PC. If you take a look at our Q1 results, we showed growth in many of the segments of the PC, desktop, emerging markets, mature markets. What we really feel is driving this is all of the things you're seeing here.
New form factors with a multitude of these 2-in-1 devices that really merge between the tablet and the classical laptop PC. We've worked on amazing experiences. You've seen us announce RealSense, which is an effort to really combine all of the various input methods that you can have with a PC. Your hands, your voice, facial recognition, all of those things are going to be embedded into the PC. You saw us start to introduce the world to those at CES, both within our booth and the keynote that I did on stage at CES. The last one is really attractive price points. I really want to spend a little bit and talk about that. If you take a look at just in general, where are we at right now? We've got Core i3 with touch at $399.
Those are attractive price points that make very powerful PCs able to be bought by just about everybody. It moves it into a price point that's accessible. We've got Chromebooks at $199. We've got Chromeboxes, which are an extension of our NUCs, at $179. There'll be over 20+ Chromebooks by the second half of 2014. We've really expanded all of our PC offerings, 2-in-1 devices, better price points, and movement into the Chrome space. We put those together, and we think that the PC is really poised for quite a bit of innovation as we go into the second half of 2014 and move into 2015 as well. The next thing we said we would do is we would aggressively move into mobile.
About halfway through this year or towards the end of last year, we said that one of our targets was going to be we'll sell 40 million tablets in 2014. Actually, we said north of 40 million tablets, to be exact, we got to sell more than 40 million. That's up from around 10 million. We said we would basically 4x the amount of tablets or our presence in mobile. As you saw in our Q1 results, we actually beat our first quarter target. We said it's an accelerating number through the year. Just part of that's the way the market works, and part of that's us getting our products into place and in the market. The target was 4.5 million units, and we shipped over 5 million units for the first quarter.
Each quarter now, as we go through the rest of the year, is an increasing number. We believe we have a good roadmap, good partnerships, and good products to come out to meet this number. We're very happy with our progress so far. We said the next thing we would do is go and get our communications capabilities up. You saw us launch the 7160 as we moved through last year in the second half. The 7260, which is LTE with carrier aggregation, is shipping in the first half of this year, during the second quarter. The 7160, which was our first LTE, you can see in products like the Samsung Galaxy Note 3 Neo, the Asus Fonepad, the Samsung Galaxy Tab 3. For the 7260, which is the next-generation LTE with carrier aggregation. Carrier aggregation gives better bandwidth and basically better data speeds.
We've got commitments from Samsung, Asus, Lenovo, Dell, all committed to the 7260. One thing I'm really proud of the organization, and you'll see a few of these in this quick discussion this morning, is we were able to introduce a new product, one that wasn't even on a roadmap at the last shareholder meeting. It really shows that we can drive innovation quickly, we can react fast, and that was SoFIA. SoFIA was a part where we had a part that came from Infineon that was Arm-based, and we've been working to replace the Arm core with an IA core, and that allows us for a very quick, very fast method to get SoCs out into the market now. That project is going on schedule.
We said we would ship it in production at the end of this year with 3G and in the first half of next year with LTE. We are on schedule to hit both of those targets. The next thing we said we wanted to do was accelerate the data center. I think one thing that people don't realize is they think the data center is one chip, one CPU. We ship over 100 CPUs into the data center right now. We have 15 custom-tailored SKUs for some of our partners who have become very sophisticated and are designing parts specifically for their workloads and for their hardware configurations. We've really gone from the data center as kind of this singular product to customized and products designed for workloads specific to our customers. We said that we would move more rapidly into the areas that are growing quickly.
You see our progress on cloud and HPC, in storage and networking. We forecasted greater than 20% growth in all of those areas. We said that the overall data center would grow at double digits, and you saw Q1 at about 11%, and our forecast for the year at double digit as well. We really feel like this area is poised for acceleration. It's a great business. Our products are well-aligned, and we're really working with our partners and our customers to design parts specific to their workloads and hardware configurations. The last area is our silicon leadership. This is a core of the company. We said that first what we would do is continue to drive Moore's Law. You saw us move to 14-nanometer production as we moved through Q1. 14-nanometer is now in production.
We'll be shipping product at the back half of this year. We really are excited about what Broadwell's the name of the product that will be first on 14-nanometer. Really excited about what Broadwell's going to bring. The number of fanless, thin and light machines that will be out there is going to be really revolutionary, and we think that this will really drive, again, another momentum around these new form factors, along with new price points. 14-nanometer will continue as we move into next year. We will bring out products like Cherry Trail, which will be the first SOC that's built on 14-nanometer. That'll come out in the first half of next year. Then afterwards, in the second half of next year, Skylake, which is really the next generation of architecture for IA.
If you start to look at the graphics performance and the power capabilities of Skylake, it really brings an even greater level of performance and capability in that space. We're really excited about the 14-nanometer product roadmap and our leadership. The other areas we're really working on, leadership in the IoT solutions. You saw that we broke out in the Q1 results, the IoT group, as a separate financial. We're really focusing on that business. It grew in Q1 30% year-over-year. We forecasted it on average to be more like 20%. We'll see how that goes. 30% for the first quarter was pretty astounding. We really feel good about the products we've brought there. We brought Quark into this space, which brings us a new capability at different price points and different power levels and different performance capabilities.
We've got our Atom-based products in there and our Core-based products in the IoT. We've combined the Wind River group and the IoT group, which really gives us the ability to provide complete solutions within this environment. We've continued to open our foundry to customers, you can see we've made announcements, Altera has continued to increase its collaboration with us, and they're our key lead customer. We've brought new products to the marketplace as well in this space. You saw us announce Edison, which is a very unique part. You can basically think of it as almost a complete PC device on the size of an SD card. It includes Wi-Fi and other capabilities in there.
Really, it's going to open up when you think about Internet of Things, wearables, a variety of different form factors when you start talking about that level of compute capability in that size of a device. We introduced our Galileo boards. In fact, we just announced at the last Maker Faire last weekend, our Galileo Gen 2, which is the next generation. What's good about this was, the level of innovation, again, if you looked at last year's shareholder meeting, neither Edison or the Galileo boards were on our roadmap. They hadn't even been conceived yet. Within this timeframe, we've not only gotten those developed and out into the marketplace, but they've had great reception. Galileo boards will continue to be sold out, and in fact, they're selling at 6x our original projections for volume. We've really been excited about the response of those.
Let's move to looking ahead. What are we holding ourselves accountable for this year? The first is to continue to lead in Moore's Law, the fundamental of this company. We'll continue to ramp 14-nanometer, bring out those products, but we're already looking ahead at 10 nanometer. 10 nanometer, we said, would remain on schedule. We believe that we have the roadmap to continue that Moore's Law development. We're comfortable that we can keep our leadership in Moore's Law. We're going to continue to build on the ultra-mobile momentum that we've had. Really here, it's about two things, hitting that 40-plus million unit tablet market, setting up products like SoFIA so that our price and our product costs are aligned with that real marketplace. Continue with PC innovation. I told you Broadwell is going to come out towards the second half of this year.
We're working with our OEM partners to bring innovative capabilities, incorporating the RealSense in there. A lot of the things, remember, if you attended CES or if you looked at that on the web, the 3D cameras, the ability to transfer files immediately to a 3D printer, that you can take a picture with your PC or your 2-in-1 device and print it out. All of those things that we said we would have are scheduled to come out at the end of this year. In fact, we're already starting to see product capabilities as we speak. We continue to forecast that we'll deliver double-digit growth in the data center. We continue to have plans and roadmaps that we believe will deliver that double-digit growth in the data center.
The last one, and one that we've really added, is to drive leadership in the Internet of Things and wearable devices. You saw us. We acquired Basis. We've formed a group focused on wearables. We've signed a lot of deals with partners to bring products to market over the next year. I think as we go through this year, you should be able to see good progress in this space as well. That's what we have looked at when we look at the year that's gone by, and as we look forward as well. I am done, and I'd like to call back to the stage my chairman, Mr. Bryant, and Renée James, our president.
You're not having a table?
No.
Okay.
Standing.
That I didn't expect. Thanks, Brian. Now we'll do a question and answer session. We'll take questions from the two mics here as well as from the internet. If you have a question, please go to the mic. Please, when you ask your question, state your name, ask your question. In the consideration of allowing enough people to ask questions, we ask you to limit your question to about two minutes. We'll try to limit discussion on any single topic to six minutes. With that, I will begin with a question on the internet. Actually, I guess I have to move it forward. Okay, number one. Question one from the internet. What is Intel doing to ensure board compensation is tied to company performance?
Did we decide David, is chair of our governance, co-chair of governance, and is subbing for the chair of the comp committee today, David Pottruck, who couldn't be here. He may get more than one chance to stand up.
Okay. Director compensation is designed in two ways. Number one, we compare ourselves to our peers, and we roughly set ourselves to be equal to the median of our peers. Today, we're slightly below average. Second, we structure the compensation with one-third in cash and two-thirds in stock. The two-thirds in stock is divided equally between restricted stock units and what we call OSUs or Outperforming Stock Units. This means that we're required to outperform, Intel as a stock is required to outperform our peers in order for those OSUs to fully pay out. If we underperform our peers, we are actually compensated less than the original award.
This particular year, since we underperformed relative to our peers, the directors, as well as our employees, were actually given less stock. Therefore, we are very well aligned with shareholders because, like shareholders, we actually in some sense get less because our stock didn't go down. We just underperformed relative to our peers, and we actually do get less stock as a consequence.
We have 15 peers. Brit, do you have the list of names?
I can provide the list of names. It's all large cap, high tech companies. Names you would expect. Apple, Google, Cisco, from previous years, Dell, although obviously they'll drop out of the peer group to lower because they've gone private. HP, IBM, Oracle, Qualcomm, Microsoft, and a few others. All of that noted.
Thank you, David. Number 2, from the web, since I have no questions in the room at this point, would you provide an update on how Intel is doing with mobile computing, and what are your plans for wearable sensor chips?
Sure. I'll take that one. For mobile, I kind of gave you the update in the presentation, and the real target is to get into the tablet space in a big way. We said we'd do 4x our volume of last year, you see us targeting 40 million tablets. We have a series of really unique and innovative tablets as we move into the holiday season that we think will really drive innovation to the Intel platform in that space. As we've introduced LTE into the marketplace, you see us getting into the mobile phone space now, and into the tablets that have connectivity. We feel like that, plus as we move in through the next year and introduce SoFIA, which is really designed for that mid-range and below phone with integrated 3G and LTE.
A lot of the world, especially outside the developed world, is still 3G-focused, 3G is very important to those spaces. We feel comfortable with the product roadmap. In the wearable and sensors, we have a series of products. Part of what Quark is designed for is wearable devices. We have some products that are down below that as well. We've signed deals with partners. You saw our acquisition of Basis. Basis wasn't acquired simply for the watch that they build, but there's a set of sensors inside there for heart rate, for motion, for sleep patterns that are very accurate and very unique, and we believe we can incorporate into other products as well. That's really the basis behind the acquisition of Basis.
Thanks, Brian. Let me go to this side first.
Thank you, board. My name is Peter Fant, I have an engineering company in New Mexico, I really wanted to not ask a question, but thank Intel and the Intel Foundation. A lot of people know about Bill & Melinda Gates Foundation, I think people don't know as much about the Intel Foundation and the good work that it does. The introduction video talk showed a lot of examples about not just the products and the technologies, but how those empower people. Some of the projects that I've been working on where I have scholarship programs and Intel Foundation has been integral in those scholarship programs providing for thousands of kids. This past year, I had one student who came up who, she was Native American from Shiprock, New Mexico.
She came up, and I had recognized her from a PBS segment that showed the science and engineering fair where she won an award, her parents commented that they hadn't seen that video, and they hadn't seen it because they don't have TV out there. They don't have power out there. They don't even have running water out there. They haul their water in. She, because of Intel and the Science Foundation, she had this opportunity to go out, and she's now going to college at University of Oklahoma. I thought that was critical to not only the products, but what Intel represents and the power that it brings to people. I want to again thank the corporation, thank the foundation, and thank you, Brian, and the rest of the board.
Thank you for your comments. Let me do the next one here in the room.
Good morning. I'm Bob Stewart from Los Altos. I have basically two aspects that I'm curious about. First, can Intel do something to improve security and decrease the sensitivity to unwanted marketing type of incursions into their viewing process on a tablet, say, perhaps using microprocessor or system design approaches? The second aspect is, what are you folks doing to move into the automobile type of devices and architectures? Self-driving automobile seems to be one of the characteristics to expect in the future, there's quite a few cars built every year, I should think that what with the federal government has now moved into the self-driving aspect of it, that there are concerns about safety, and also hacking into some of the proposed self-driving requirements of the federal requirements. I should think Intel should move very strongly into this area, and I'm wondering if you are.
Okay. Let me give Renée the security question, and then we'll move to Brian for the automotive question.
Okay. Go ahead.
Didn't think I could get it on my own.
On the topic of security, tablets today, I'll talk about things that we're doing today. We have several software services through the acquisition of McAfee three years ago, new services that we've developed around personal identity protection and consumer product protection for all devices, PCs through phones, on any operating environment, that will allow you to protect yourself, your identity, and block yourself from unwanted nuisance kinds of things as well as attacks. Going forward, the products that Brian talked about this morning on 14-nanometer are the first set of products that have security features built into our processor products, SoC products. In conjunction with the software services that we have, we'll be able to add the next layer of protection, which actually blocks many known types of malicious attacks. We'll continue to get stronger in the next year.
On the automotive one, what a lot of people probably don't know is probably the most famous self-driving car, the Google self-driving car, is actually powered by four Xeon processors. We are heavily engaged in just that one as an example. If you look at it on a broader spectrum of just saying, what are we doing in automotive? It's part of the Internet of Things group. I think I've met with almost every single CEO of automotive company in the last three months, all of them interested in incorporating Intel technology into their We told you that the Internet of Things group was growing at 30% year-over-year in Q1. The two fastest areas of growth for that segment were retail, think of it like point of sales and smart signage and things, and automotive. It's absolutely a focus area for us.
It's a focus in self-driving, also in vehicle entertainment, all kinds of features. The connected car, all of those things are very important to our growth and areas we're focusing on right now.
Let me take the next question from the web. With other competitors encountering difficulties in Moore's Law, is Intel also seeing Moore's Law slowing down? If not, why not? We'll let Renée have that one as well.
Brian talked about this in his presentation this morning. We are not encountering difficulties. We're very confident in our abilities in Moore's Law. We have 14-nanometer in production, 10 nanometer is well under development, and we have line of sight to seven nanometers and beyond the 10 nanometer. It is becoming more challenging for everybody, Intel is very well positioned. We have a very strong team and certainly the resources to continue to move Moore's Law forward.
Next question from the floor.
Hello, my name is Daniel Goldsmith. Brian, you gave a very good presentation, an upbeat one, is what I expected. I wanted to know, when the meeting's over, behind closed doors with your staff and your board, what gets your blood pressure up, and what's challenging and what's not working?
What gets my blood pressure up behind the closed doors of the board? I'm not going there. Usually, that's what I've done to get their blood pressure up, probably. Two things I'd give you. One, I think personally myself, I need to move faster. I think, when you take these jobs, before you get your first CEO job, and they come and pat you on the back, the number one advice people give you is, make decisions faster, move faster. You go and you try and do that, and you look back after your first year, and you still look back and say, "Gosh, I probably should have gone faster in some of these decisions." I hold myself accountable for not making some decisions, not moving faster in some areas.
I'd say the other one is that we're trying to make a lot of change here. We're trying to move to an SoC architecture, move into the mobile space. At times, we want to go back and do just what we're good at, which is PCs and the servers. These require different skills, different focuses. It's that pushing against the DNA and keeping people moving to, hey, here's where the world's moving. How do we keep our product focus and our attention over there? Those are the two big things.
I would have added a third, because we did talk earlier. I would have said, we talked about a flat stock price for 10 years. We're as frustrated as anybody about that. You see all the things we think we can do. We can get to products, we can get to technologies. We do things nobody else in the world can do, and we're not translating it into as much market success as we would like. What I like to push on him on is, it's nice that you can invent stuff. How can we make more money out of it? How can we change the company? How can we become better? I think if you asked me about my question, I would have answered it that way for him. Now, he would have answered differently. We see that. You can understand.
I think I actually speak for the board in that we are very focused on driving this company shareholder return. Next question will come from the web, then I'll come over here. It seems to me that incumbent board members are rarely unseated. How does tenure of the board compare to industry norms? Is the level of average tenure optimal? For that one, I would turn to our other co-chair of governance, Susan Decker.
Thank you for the question. We look at that on two bases, both tenure and our retirement policies, feel we're pretty much within the averages of the S&P 500. Looking across all our board, our average tenure is right around nine years. The S&P 500 average tenure is 8.6 years. On our board, six of our Board members have served on the board for five years or fewer, four for five years or fewer and six for five or more. If you look at the S&P 500, again, two-thirds of the S&P 500, the average tenure is between six and 10 years. That's on the tenure basis. In terms of retirement policies, the overwhelming majority of retirement policies of the S&P 500 are on the basis of age as opposed to tenure. Intel is no exception to that.
We have a standing guideline that existing directors do not stand for re-election after the age of 72. On both bases, we think we're right in the line with the averages. The only other point we'd make is that we do value the experience of our board members and our management team. As you know from Brian's presentation, process technology is a complicated subject. We operate in a highly technical industry, and the capital allocation decisions we make often span 10 years in terms of understanding their success. We really value having board members that were there for the history and help us not make mistakes again. Some of our most valuable and long-tenured board members are people like Arthur Rock and Gordon Moore and Andy Grove, we hope we're in good company with those folks.
From the room, please.
Good morning. My name is Stefan Obol, Port St. Lucie, Florida. I actually submitted a bunch of questions last week via the intc.com website. I just take the opportunity and go through my little list here.
Rather than a long list, could you tell us what's the question most important to you, and we can focus on that?
I have just a little topic. First one, that's about, let's say, accounting-related. Does Intel's leadership approve on some habits at-- It's all about McAfee, so that would probably go into Renée's field. At McAfee, it seems to be a habit that in order to avoid internal accounting policies, that people are being pushed to split their expense reports to keep them lower. If you have, let's say, a $10,000 expense report, split your hotel, split your airfare, to keep them at $2,000, that they don't go up the chain. That is being sold to employees, to the actual person that does the work, as that way it doesn't go up the chain. It's approved faster, so you get your money faster. I don't think that that is the right way to do that.
That is the way it happens there, and when somebody complains about this, they are being threatened that they might lose their job over it.
You're correct. It's not the right way to do that. We're unaware of that. I've looked at my CFO, who's also unaware of that. He's going to go find out if that's accurate, and if he is, we'll deal with it. That's absolutely unacceptable.
It happened to me.
It's absolutely unacceptable.
The next thing goes along the same lines.
We'll give you one more because we're going to run out of time, so you can pick your best.
Pick my best. Okay. Wasteful spending. A person who lives in Florida is being sent to Alaska to do a job, while when in my hometown, another job comes up that needs to be done. They actually fly me to Alaska and have a guy from California flying into my own hometown in my backyard to do a job that I could do there. When I ask, "Hey, couldn't we just switch it?" "It's not your job to think about it." There is so much wasteful spending there, and there could be so much done. I am just one person, and I found so many things where we can improve at really. The bottom line is shareholder value and the reputation of the company and
We agree that's the bottom line. Since you seem to have a whole list of things that one has to get into some specific detail to resolve, could I ask you to talk to Stacy? Would you hold your hand? Stacy's our Chief Financial Officer. I'm sure he's interested in everything you're saying. He'd like to see the full list, and he'd like to go fix it because that's not what we believe in doing.
Thank you.
Next question I'll take. Actually, can we go back to the fifth question? Next question from the web: Would you share Intel's plans to return capital to shareholders, including but not limited to buybacks, spin-off, and dividend increases? For that, I would turn to Stacy again.
Good morning. Let me just add my welcome to everybody. I'm very pleased to have you here. In terms of our capital allocation priorities, it's first and foremost invest in our business, and I think you heard a lot of that from Brian today in terms of investing in areas where we think we drive long-term shareholder return. Behind that is our dividend policy. Our dividend yield today is about 3.5%. We've, I think, had one of the industry-leading dividend programs over a very long period of time, and it's a place where I think I can speak to the board. We're very committed to the dividend, and as we grow earnings, our plan would be to grow the dividend commensurate with that earnings and cash flow growth. Then third way that we return cash to shareholders is via the buyback.
I think you can really see these priorities at play in 2013. We generated about $21 billion of cash from operations in 2013. We invested about $11 billion in our factories, and you heard that priority from Brian and Renée in their answers. That left about $10 billion of free cash flow. The dividend that we paid out in 2013 was about $4.5 billion, so about 45% of our free cash flow was paid out to shareholders via the dividend. Then we did slightly over $2 billion of buyback.
Also within 2013. You can really see those priorities play out of investing in our business, returning cash to shareholders, and generating shareholder return via the dividend, and then using the buyback as the other way that we return cash to shareholders.
Thank you.
Hello. My name is Shirley Wynn. I'm of Silicon Valley. I have a very light question. This is my first Intel annual meeting. Two things that I heard that was very interesting is the products you have, Edison and Galileo. I was wondering, how do you name these products?
We have a whole naming convention for all of our products, like Atom and then there's products like Broxton or Bay Trail. Most of our products are named after, it depends, a city, a river near the design team. Some geographical entity that's near the design team, usually they're a river or a city or something like that. Edison and Galileo, those are going to become families of products that are really designed for inventors and the creative side. For Galileo, which is a simpler product, we've decided to go with older types of inventors, so Galileo. You can pick your favorite ancient scientist, and that'll be it. For Edison and the families that'll come after that, we're trying to pick more modern scientists that are inventors and creators.
Well, I hope Intel will not totally be against older scientists and-
Absolutely not
Because of my recent reading of astronomy, that's why Galileo meant something to me.
Yes.
Two other names for Intel to consider are Newton and Einstein.
Right. Just so you know, my God's name is Newton. For that reason.
Yes. I think naming things properly or easy to catch attention is important, and perhaps in an indirect way, it could bring about shareholders' value as well.
I absolutely agree, actually. Good question.
I'll take the next question from the web. It appears that total executive compensation, excluding the CEO transition, has increased year after year and not completely aligned with company performance. In light of the company's stock performance, why is that? Again, I'll turn to David Yoffie, who is acting for the compensation committee here.
We believe that senior executive compensation is also very well-aligned with shareholders. In fact, last year, executive compensation did go down as the stock price did not improve. All executive compensation has three components. One is a base. The Intel base is actually very low and relative to the valley. The largest component of Intel compensation is stock. 60% of the stock that is given to our senior executives is in the OSUs that I mentioned before. Those have again underpaid relative to the actual targets that were set because of last year's performance. The third component of Intel compensation is bonus. Bonus is tied to net income. Net income was down last year, therefore, bonuses were down last year.
Thank you, David.
My name is Joseph Pruss. My wife Cheryl and I are shareholders. Can you tell us something about your relationship with the newly announced most valuable company on the planet, Google, and their announcement of going to look into developing their own hardware for servers? Can you tell us how you work with your server clients and just how you work with them and how you feel about that announcement?
Sure, I'll take this one. Our relationship with Google is actually quite good. We spend quite a bit of time at almost every level, from myself and Renée meeting with Larry and Sergey, depending on the projects we're working on, down through the organization, depending on which segment we're working on. Urs and Diane spend quite a bit of time at the server level, and our software guys and Sundar and his team. Actually, over the last year, I'd say our relationship has strengthened with Google. I can't really comment, I'm not inside of Google, and I'm not going to represent their product plans. I would tell you that we're very comfortable with our product roadmap. I showed you we have about 100 different products now based on workload.
We have about 15, actually, it's going to probably grow to well over 20 over the next year or so, custom products for our various partners. It's the companies like Google that the Googles, Facebooks, Amazons, the big guys who are really designing their data centers and optimizing their workloads that are out buying those custom parts. We're fairly comfortable that our roadmap and our relationship is good and that we can continue that partnership. Beyond that, I'm not going to comment on what they comment on. That's a Google plan.
Seeing no more questions in the room, I'll take the last question from the web. What is Intel doing to combat global warming? For that, I turn to Michael Jacobson, our Director of Corporate Responsibility.
Encourage everybody if you're a little behind intel.com. Today, we released our 2013 CSR report for full information on everything that we are doing. Let me touch on a few things this morning. I'll do it in three areas. First, very quickly, I'll talk about our operations. Intel, again, according to the EPA, is the largest purchaser of renewable energy that's equal to our total energy use in the U.S. We've invested, over the last six years, about $85 million in energy conservation, in 2,000 energy conservation projects. That's reduced our energy use by 1.75 billion kilowatt hours, and actually reduced our energy cost by almost $180 million over that same period of time. We have 18 solar facilities at 10 sites, 36 LEED certified buildings. Our greenhouse gas emissions since 2008 have reduced by 31%. How do we reduce our products?
This is again, where the power of Moore's Law is really amazing. You bought a server about eight years ago, you buy a server today, that server you bought today is 1,900% more energy efficient, and its performance is 1,100% better. Our technology and our operations are just a fraction of greenhouse gas emissions and impacts to climate change. The real opportunity is the power of our technology to make a difference. Whether it's big data or Internet of Things, connecting data to make cities smarter, make transportation more efficient, the opportunities are tremendous. Thanks.
Thanks, Michael. With that, I'd like to thank Brian and Rene, and call Kerry back to the stage to read the preliminary results.
Okay. No change, of course.
Thank you, Andy. We do have preliminary results. We will have final results in the next day or so, and all of those will be posted on our website, and will be in a filing with the SEC within four days. The 10 nominees for director who receive a majority of the votes cast with respect to that director are elected, and each of our nominees received approximately 89% or more of favorable votes, and so each of our nominees is elected for another year. All of our directors are elected annually. On the ratification of the selection of the company's independent auditors, approximately 98% of the shares voted were voted in favor of ratification, and so the proposal is approved, and the auditors are smiling, so that's good.
That's good.
On the advisory vote to approve executive compensation, approximately 94% of the shares voted were voted for the proposal, and so that proposal is also approved. As I mentioned, final vote tallies will be posted on our website, intc.com, and in our next filing with the SEC, the official vote and the form from the Inspector of Elections will be posted. With that, let me turn it back to Andy for final comments.
Thank you, Cary. As Cary mentioned, we would like to direct you to Intel's Investor Relations website, intc.com. The website contains stock quotes, webcast events such as this meeting will be on the site, the other investor information. On the website, you can also sign up for electronic delivery of communications, such as this proxy statement, the annual report. Electronic delivery certainly reduces our costs, also cleans up a lot of excess paper you may be receiving. Please consider that seriously. With that, our agenda having been completed, may I have a motion to adjourn the meeting?
I so move, Cary.
Second? I got a second. Okay. On behalf of Intel, thank you all for attending this stockholder meeting.