Intel Corporation (INTC) Message Board

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Technology Stocks : Intel Corporation (INTC)

INTC 46.48

-4.5%

Jan 30 3:59 PM EST

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To: hueyone who wrote (174612)	5/15/2003 4:52:16 PM
From: Saturn V	Read Replies (2) of 186894

Ref < < If the company sells shares on the open market and then turns around and uses the cash proceeds to pay the employees, everyone is agreeable to recognizing an expense on the income statements for employees as well as dilution. If the same company takes those same shares and grants them directly to the employees instead of first selling them on the open market, nearly everyone is agreeable to recognizing an expense on the income statement and dilution .... In both cases shareholders suffer dilution and an expense on the income statement > I think what you meant was that if the company sells an option on the open-market. Then it buys an option on the market and then gives it to the employee. Now you claim that now it is a expense which should be charged to the earnings. However the company would have an extra income item due to the sale of the option, which would exactly balance out the expense of purchase of the option. So the company total income would be unchanged. The only problem is that the employee will be taxed for the "value of the option" immediately, since this will be considered immediate income. This destroys the option as an incentive.

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