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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Amy J who wrote (165481)	5/29/2002 12:30:07 PM
From: Ali Chen	Respond to of 186894

"This is called motivation. Motivation is a good thing." Which motivation you are talking about? Motivation to build a revolutionary product, to develop a dominating technology, to close a national hole in technology in some areas (which may take years and years of hard work)? Or a motivation to "restructure" an organization, or cut R&D, just to make a looking-good quarterly report, so your options would appreciate in value? I think you need to make some distinctions here, as GVT points out. - Ali

To: Amy J who wrote (165481)	5/29/2002 12:57:05 PM
From: GVTucker	Respond to of 186894

Amy, RE: Don't kill an execs or employee's motivation - that would be a bad thing. Motivation is a key ingredient to the GDP. Nowhere have I advocated doing away with anyone's motivation. Options, bonuses, share grants, all those can motivate employees. Note that the option tax loophole only began to be exploited aggressively in the mid 80's. Somehow, before then a lot of employees found motivation somehow. A consultant delivers X for you today, then leaves. They're more appropriate for shares. Granting shares is used for the pay-as-you-go model, say for a consultant or an advisor. A one-time situation. Not exactly a strong need to create an incentive of long-term motivation. You're making some extreme assumptions on how share grants work. There is no reason for share grants to vest immediately. Things can be structured as a long term solution without options being essential. In your scenario, not common to the rank-and-file, which just to remind you plays a huge role in the more empowered industry of high-tech. If the law changes to expensing & taxing, then one of two things happen to keep expenses fixed: a) lay offs for employees or b) all employees get less options. Neither of these two things will help investors or the GDP grow. Hey, I'm all for lower taxes. Lower taxes mean that GDP will grow. Heck, I'd be in favor of a flat tax with zero corporate tax. Or even better, a consumption tax. Then we'd really be cruising. But the fact of the matter is that we have an income tax. If that is a fact of life, I still don't see why one method of compensation should have a tax preference over others. It would perhaps be an interesting research project for someone to examine corporate performance versus method of compensation. I know that we have differing opinions of how that research came out. from me: RE: "With options, management doesn't lose with a declining stock" from you: Incorrect. A share has value all the way down to Epsilon, while an option has value down to the grant price. Sorry, I disagree. If an employee at Intel got options today, the strike is the market price, $27.50. When the exercise date comes, if Intel has declined, it doesn't matter if the stock price is $25 or $0. The options are worthless. If instead of options the employee was granted shares that vested on that same, there is a very real difference to the employee if the shares are worth $0 or $25.

To: Amy J who wrote (165481)	5/29/2002 2:49:15 PM
From: Mary Cluney	Read Replies (1) \| Respond to of 186894

Amy,<<<Options are truly for innovative companies that take risk, and for investors who are interested in growth stocks.>>> You write with a lot of authority and sound like a sincere true believer. Reading your thoughts on this matter is almost like reading a "New Yorker Magazine article" - "Reporting from the Front Lines and in the Trenches with Amy J". I really enjoy your exchanges with GVTucker. You really hold nothing back and you make a terrific effort in trying to explain your position. GVTucker, on the other hand, doesn't really make the effort to fully explain his position to dolts like me, but you can tell he has a lot of experience and knows quite a bit about the subject. I am somewhere in between where You and GVTucker stand. I haven't had the same expereinces the two of you had, but I have seen a lot more just from a longevity point of view. I think a lot has to do with the entire culture of the company. The best example of highly motivated employees whose incentives are based in mostly cash are the new hires in the top law firms in the country. These twenty five year olds start out with salaries of up to $140k a year and annual bonuses between $20 and $40K. These kids work their butts off just as they do in the highly charged and highly successful tech companies that rely heavily on stock options. In either case, I don't think money is the primary motivating force. However, without the money, the charged atmosphere would not exist either. I think both models work. But I agree with you, tech companies (using options)are more likely to create the highly charged atmosphere that leads to exponential growth and success. Regards, Mary