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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Stock Farmer who wrote (114189)	2/24/2002 4:01:11 PM
From: Peter J Hudson	Read Replies (1) \| Respond to of 152472

John, I have to believe you are deliberately distorting the facts. <<To summarize: employees get value. This value doesn't come from the company, and it doesn't come from shareholders. Where, pray tell, do you think it does come from? There is no such thing as a free lunch.>> The value comes from an increase in market value of the underlying issue. Let's assume you purchase call (LEAP)options on the same day that the employee receives the stock option grant and you sell your option on the same day as the employee at a huge profit. Where did your value come from? Did it cost the company? Did it cost the shareholders? If the stock price hadn't increased would the options program be ok? INCREASE IN VALUE OF AN OPTION AFTER IT IS GRANTED IS NOT A COST TO THE COMPANY. I am not saying that stock option plans are never abused. The abuse usually benefits executive management and directors, but if you are claiming that Qualcomm is guilty of bad practices you need to be specific. The fact that employees benefited from an increase in the value of QCOM stock is not evidence of wrong doing. Pete

To: Stock Farmer who wrote (114189)	2/24/2002 5:20:01 PM
From: rkral	Read Replies (1) \| Respond to of 152472

John, your excellent argument has me 99.9% convinced. Your following sentences are actually sufficient: To summarize: employees get value. This value doesn't come from the company, and it doesn't come from shareholders. Where, pray tell, do you think it does come from? There is no such thing as a free lunch. For my own understanding, I have paraphrased your story from an options perspective: Premise: 1. Joe Sixpack grants a call option to his only employee. Conclusions: A. Joe is a call option writer (seller). B. His employee is a call option buyer. Premises: 2. Excluding transaction costs, the option market is a zero-sum game. 3. The employee exercises his in-the-money call option for a monetary gain. Conclusion: C. Excluding transaction costs, Joe Sixpack suffers a monetary loss equal to the employee's gain. Note that Joe Sixpack gave the call option to his employee. No monetary compensation was involved ... hopefully, Joe received increased performance instead. Additionally, I am still wrestling with the notion that the gain should be considered employee compensation. Caveat: The option perspective may not be useful for considering the tax consequences.

To: Stock Farmer who wrote (114189)	2/25/2002 9:51:18 AM
From: carranza2	Read Replies (1) \| Respond to of 152472

Just exactly how do you propose that talented engineers--the kind that makes wizardry like GSM1x work--be compensated? A week's salary and a ham at Christmas time? Free pastries and coffee on Fridays? The single best means of motivating someone is to make him a co-owner of the enterprise so that its success is directly related to his performance. Stock options are a tremendous vehicle with which to achieve this. If stock options were not part of a compensation structure in a highly competitive environment, I'd consider the BOD a failure. And, yes, when you pay an employee, the value of the enterprise, whether in the stock's valuation or its bank accounts, goes down. So what? The point is to create an environment where the motivation is so strong that one can expect terrific performance on a routine basis. The Q has apparently hit the sweet spot in this regard, not only is it brilliant rechnologically, it has also been named one of the best companies to work for in America. If generous stock options were not part of a compensation package, I'd be worried.