Brian, stock options are a great retention tool and am a huge advocate of the use of them, however, right now they are not working when you have this: finance.yahoo.com
Because the labor market is tight at the higher-end, other firms are enticing Intel executives/employees and Intel candidates with more hard cash, while Intel continues to throw options at people which is no longer working, thus it's a waste.
So, Intel's board needs to do an about face on options, reduce their issuance, while finding other more effective means for this phase.
Intel has two issues right now that are specific to a tighter global labor market at the mid to high levels - retention and hiring.
People increasingly are turning down jobs at Intel because inflationary increases make them more desirous of guaranteed cash than options. This problem can be fixed by a rise in interest rates (so as to eventually reduce inflationary pressures that eat up cash) so Greenspan needs to keep raising rates.
Meanwhile, the retention problem can be fixed through an issuance of dividends (provided they also reduce options since no one currently appreciates them enough.) A cash-dividend gives employees cash that counters inflationary pressures and thus reduces the appeal of outside offers. So at this point, I would say cash-dividends are certainly better as a retention tool than throwing away options onto people that aren't appreciating them enough.
A dividend would also appease Wall Street - one of the analysts brought this up during the conf call - and while he prefaced his comment inappropriately so, his message on the dividends is accurate (that WS would treat Intc more favorably) - in the face of tepid stock, if options are no longer appreciated enough don't waste them.
Regards,
Amy J |
