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Technology Stocks : Intel Corporation (INTC)
INTC 39.74-1.9%11:36 AM EST

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To: Amy J who wrote (174451)5/9/2003 9:08:43 AM
From: GVTucker   of 186894
 
Amy, RE: But I'm in 100% agreement with the refresh Intel did in December, because (pure mathematics) the stock was underwater. The evidence was very solid that they needed to do it. I'm in complete agreement with it.

But doesn't that go completely contrary to the theory behind stock option compensation?

The selling point all along has been that when the stockholders do well, the employees do well. Stock options are a way of linking the two.

By repricing options that are underwater, Intel in essence is telling us that it doesn't matter whether stockholders will do well or not. Management will get theirs. Stockholders lose a lot of money, no big deal, we reprice underwater options. If stockholders do well, well then, yeah, the two get linked.
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