Willcousa, I actually agree with this point here in the scenario where a stock drops due to a company's own stumbling:
"Whenever the stock gets hammered new options get issued. ...Finally the bottom is found and voila, the employee has the perfect entry price. The investors suck wind."
I think the stock has gotten overly hammered even in the face of a great earnings report that showed strength, while other consumer firms struggled. This is good. So people should indeed be rewarded.
But it also stumbled from say $30 down to $23 after last year's stumble, so I'm not particularly feeling it's a good idea to dish out more options for a free ride that's a bounce back to $30. I'd rather see a cash bonus go out for cleaning up the stumbling.
There was a report proposing Otellini could get possibly 300,000 more shares granted, as an add-on to what he already got this year. I'm all for it, if it's at a reasonable price, but not an undervalued price such as $23 due to last year's stumbling. I bet Intc reaches $30 in say a year or so. Why should a person get $3M option bonus for a bounce back from its own stumbling? So my vote would be to either give him 300,000 more shares but at $30 grant price (or some mid-point price between what it was before Intc stumbled last year when he was COO and what it is now), or to give some type of additional cash bonus.
This isn't specific to him, it's actually a general comment to all Intel employees.
I'm normally 100% for giving options to people, but given how Intel stumbled last year, and how it's stock is now undervalued due to this stumbling and with the economy showing signs of turning around in hightech, I'd rather see people get compensated with cash right now because they should be rewarded for cleaning things up, but not overly rewarded for stumbling.
In a nutshell, my bottom-line is, I feel rather strongly that people shouldn't benefit from Intel's stumble last year by getting more options at the current lows. It doesn't feel good to us investors, does it? Why give away more options at a bottom from stumbling, just for a free bounce back?
I don't mind giving options at a low, if it is 100% due to global economic conditions, because I don't think people should be penalized for global conditions (or for US Presidents that start random wars with other countries), but am less motivated to give out options to people because the stock partially dropped due to stumbling.
I think the stock is undervalued and if so, cash would be much cheaper than stock. Which form would be more appreciated right now after the stock has been beaten down to death?
I'm also hearing things that makes me less convinced Intel employees appreciate their options as much as they should be appreciating them, given the stock has been beaten down. What would make people happier, right now? Cash or options? If cash makes them happier, give them incentive cash bonuses. Since the stock seems too undervalued - why give them a free $3M when you can make them work for $600k more in cash bonus. I think options may not be a good way to use shareholder money when it appears a stock has tumbled a bit due to a company's own mistakes. Granted I believe their ability to clean things up is bringing Intel's stock to the cusp of possibly a turnaround.
I think my vote would be to pay them in cash or cash bonuses, conserve the stock. After the stock bounces back to what it was before last year's stumble, fine, then hand out the options.
Maybe Intel's board can figure out some type of compromise, where they properly get compensated for cleaning up the stumble thru cash, while not giving away tons more of options at today's low prices which in part are low due to Intel's own stumbling. It's the later part that makes me hesitate to give more options at today's lower price. If Intel's lower price were purely due to global economic conditions, then fine. But it's not. Intel's board needs to figure out what portion of Intc at $23 is due to Intel's own stumbling rather than purely economic conditions. They need to back that part out of the compensation, otherwise it doesn't feel right.
Regards,
Amy J |
