Willcousa,
Whenever the stock gets hammered new options get issued. Sometimes replacing the old ones.
I've been reading off-and-on for years, and I finally decided
to register and post.
Actually, this happens very rarely. In 18+ years of working for several companies in the semiconductor industry, through several economic cycles, I've seen this happen twice. In only one case were existing options replaced by lower-priced options, and that was not at Intel. The other was a grant of additional shares. In neither case was this the result of volatility. Both were in the middle of major, sustained economic downturns that left employees with options that were likely to remain worthless for years.
Volatility is not the friend of the employee with options. Rather, it appears to me that volatility benefits the long-term investor or day trader, who have to opportunity to "buy the dip" if they choose. In contrast, the employee benefits only from upward movement.
As ChipGeek wrote, options are part of the employees' compensation. My salary is less than it would be if I did not have options.
Options are intended also to act to retain employees. Options that are too far out of the money do not serve this purpose. Do my options at $60 encourage me to remain at Intel long enough to be able to exercize them? No, because I don't see much chance of the price getting back there before they expire. So they are worthless both to me and Intel. Do the $24 options I got to replace them? Yes, because it is likely that they will be worth something when they vest two years from now.
Chuck |
