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Technology Stocks : Intel Corporation (INTC)

INTC 45.51

+10.7%

Jan 9 9:30 AM EST

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To: ptanner who wrote (177818)	5/6/2004 10:35:43 PM
From: Elmer Phud	Read Replies (2) of 186894

ptanner - What if instead of an option the company gives the employee shares of stock? Would this be considered an expense since the company could just 'print up another one'? I think it would be. I think it would be too because capitol has changed hands. Or closer to the question at hand. If the company bought calls costing $N and gave these to the employees then this also would seem to clearly be an expense (IMHO). Sure. The company incurred an expense. I think even Robert could grasp that one. I think it assumes the grantor could have sold CC instead and provides a reasonable valuation for a comparable transaction for which the proceeds of selling the calls accrues to the grantee rather than the company. Isn't this 'opportunity cost' to the grantor exactly what the proposed option expensing amount would correspond to? In this context it may make sense. However I am fundamentally opposed to expensing opportunity lost unless the company would have sold the CCs instead. I don't think that is the case. Had they not granted the options to the employee they would not have sold an equivalent number of CCs, would they? Otherwise everyone who holds shares and doesn't sell CCs could claim a loss for the missed opportunity, no? If Intel holds an additional 100 million shares, over and above the number needed to cover their outstanding options, and they don't sell CCs on them, have they suffered a missed opportunity? (never mind the fact that there wouldn't be enough buyers for that many calls). You write options. If I asked you to give* me 100 covered calls wouldn't you consider this to be an expense? How would you value it?* Good question. I would have to see value in granting your wish. Otherwise.... I guess my point here is that obviously there is an expense associated with granting options, the question is when does that expense occur? I don't think it's at the time of the grant. It's an interesting question as to how to value the expense at the time of the exercise. But that's another discussion.

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