My thoughts on the Intel stock option grants.
Some folks suggested that Carl is upset because the stock is down, and there is probably some truth to that. It INTC were at $100 per share, I don't think anyone would be complaining.
But to me, that is one of the issues. There seems to be a disconnect between the performance of these executives as reflected in the stock performance, and the options compensation. And I know that some of these options don't vest completely for five years, that these guys are getting option grants based on future performance. Still, it seems outrageous to be rewarding these folks in a very grand manner when the owners of the company are suffering great losses.
This fall:
Vadasz received options 313,825 shares, now owns options on 2.1 million shares. He runs Intel Capital, how much money did they lose in the last year?
Maloney received options on 529,707 shares, now owns options on 2.7 million shares. Runs Intel communications group, a cash drain.
Splinter received 528,852 for a total of 3.77 million shares. VP of global sales, last I looked, sales were about flat.
My two problems with these, and with the options compensation for the real top executives.
First, they seem way too high. These guys may be great, even phenomenal managers, but they are not Rock Stars. They are not going it alone, there are 1000's of employees supporting their work. Some of their work may be creative, but most of it is implementation. And implementors shouldn't get compensated like founders or creators.
Second, their compensation should be tied to their performance. And frankly, I don't think options are the way to do that. Maloney can run the communications group into the ground, and if the IAG does great and the stock goes to $50, where he cashes out, he will receive $135,000,000. from his current options. (EDIT: To put that in perspective, Maloney alone would receive 13.5% of Intel's total earnings last quarter).
I'm old fashioned. Pay these guys on a percentage of the gross profit they generate, after the fact. Let them get rich, but not obscenely rich, on the owners profits. If they want to gamble on their own performance, let them do it with their own money. They can buy at the money Jan '05 leap calls today for $4.75.
John |
