Intel Corporation (INTC) Message Board

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Technology Stocks : Intel Corporation (INTC)

INTC 37.81

-4.3%

Dec 12 9:30 AM EST

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To: GVTucker who wrote (165444)	5/28/2002 1:04:14 PM
From: L. Adam Latham	Read Replies (1) of 186894

GVTucker: Re: By leveraging management's compensation via options, this gives management an incentive to take riskier returns. (If they were compensated by straight stock rather than options, management would lose money by the stock price declining. With options, management doesn't lose with a declining stock, they only win with a rising stock) With the greater emphasis on options, this gives management incentive to take on extra risky projects. If the project works out management gets their home run and shareholders are happy. If the projects fails, shareholders lose but management loses nothing. That is the main problem with incenting management with options vs granting them stock. The flaw with this argument is that many investors feel that taking on high-risk/high-reward projects is the RIGHT thing to do, and should NOT be discouraged by the government. Investors who want low-risk should diversify and/or stick with CDs, Bonds, or low-risk mutual funds. Adam

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