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Technology Stocks : Intel Corporation (INTC)
INTC 40.56+10.2%Nov 28 9:30 AM EST
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To: JDN who wrote (67169)10/22/1998 12:38:00 PM
From: Paul Engel  Read Replies (3) of 186894
 
JDN - Re: "stock option plans are supposed to mean the executive
RETAINS his shares proving he is working as well as he can to increase the value of the company. "

Most stock option plans are set up so that a block of share OPTIONS is given which can be exercised (bought) in the future. Depending upon the particular type of program, the "vesting" time may be from 1 to say 4 or 5 years.

Many option plans, for example, provide for X shares to be granted which can be exercised in 25% increments starting one year from the grant date with the second 25% being exercisable 2 years after the grant date, etc. Nearly all option plans contain a CUT-OFF date, indicating that ALL OPTIONS MUST BE EXERCISED WITHIN 10 YEARS FROM THE DAY OF THE GRANT.

In that case, the options would EXPIRE 10 YEARS AFTER THE GRANT - and DISAPPEAR IF NOT EXERCISED by then.

Don't you think 10 years is a long enough time ON THE JOB - for each such option - to insure the executive has performed for the shareholder ?

And don't forget - key employees and executives are granted new option on a yearly basis whcih may not vest for 4 or 5 years into the future (and expire perhaps 8 or 10 years from the date of grant). That provides a CONTINUAL incentive for the employees to work for the betterment of the compnay and shareholders to INCREASE the value of these FUTURE options.

Paul
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