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Technology Stocks : Intel Corporation (INTC)
INTC 36.15-0.6%Dec 24 12:59 PM EST
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To: hueyone who wrote (178520)7/7/2004 10:06:16 PM
From: rkral  Read Replies (2) of 186894
 
re: Fuzzy Math and Stock Options

I got to wondering about the numbers should House Bill H.R.3574 become law. For Intel for 2003 ...


Options granted to all employees (A)          109.9  mln
Weighted-average exercise (B)                $ 20.22
Weighted-average fair value (C)              $  9.02
Option expense per FASB (= A x C)            $991    mln

Options granted to "top 5 paid" employees (D)   2.65 mln
Minimum value (E)                            $  1.52
Option expense per H.R.3574 (= D x E)        $  4.0  mln


So the amortizable option expense would drop from $991 mln to $4 mln. What a joke!!!

Ron

P.S. Weighted average exercise for the "top 5 paid" employees assumed to be the same as for all employees. I verified the disclosed $9.02 fair value using Black-Scholes, and then changed the volatility from the disclosed 54% to 0.001% so as to obtain the "minimum value".
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