Speaking of rewards..Article..New stock options for Intel workers..
news.cnet.com
By Bloomberg News
April 5, 2001, 11:55 a.m. PT
Intel said it will issue additional stock options to most of its employees after the chipmaker's shares fell 65 percent in the past year.
The new program applies to more than 80,000 workers granted stock options from December 1998 through February 2001, with a split-adjusted price of more than $30 a share. The new cost is $25.69, compared with Intel's opening price of $24.25 Thursday.
Intel and other computer-related companies have seen their shares plummet amid a slowing U.S. economy and slack demand for personal computers. The chipmaker has lowered its sales targets mid-quarter for three consecutive periods and now expects first-quarter sales to drop 25 percent from the previous quarter. The company also has reduced discretionary spending and announced 5,000 job cuts.
"I recognize that your commitment is strong, even while times are hard," Chief Executive Craig Barrett told employees in an e-mail detailing the new options. "We hope it provides ample evidence that our commitment to rewarding employees over the long term is unwavering."
Half of the new options can be exercised beginning in March 2002 and the rest in 2003, Santa Clara, Calif.-based Intel said.
Granting new options is becoming common as companies try to retain employees in the face of declining stock prices. Microsoft doubled its annual stock option grants to all of its full-time workers a year ago, and Cisco Systems also has said it will issue new options. Some companies prefer to issue more options rather than reprice current packages because rules by the Financial Accounting Standards Board force companies that reprice to charge the cost against earnings. One investor said he feels conflicted about Intel's new program.
"You want them to retain the best employees, but on the other hand, eventually that catches up to you because you end up diluting the shares," said Doug Johanson, principal at Vista Capital, which owns 40,000 Intel shares.
The chipmaker has balanced those priorities well so far, the timing of this move is good because the market has fallen so far, and the new price is fair, investors said. Still, any time a company issues new shares, they said, it's cause for concern.
Intel's award of new options was reported first by the San Jose Mercury News |
