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To: Johnny Canuck who wrote (37960)	8/8/2002 4:04:50 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 69188

Thursday August 8, 12:17 am Eastern Time Reuters Business Report Intel Won't Count Share Options as Expense SANTA CLARA, Calif. (Reuters) - Intel Corp. (NasdaqNM:INTC - News) will announce on Thursday that it will not account for stock options as an expense, joining a growing list of high-technology firms that are bucking a growing trend among U.S. companies, a source familiar with the matter said. ADVERTISEMENT Intel will announce its intent not to account stock options as an expense in a Securities and Exchange Commission filing to be made public on Thursday, according to the source who knows about the planned filing. Technology companies, unlike companies in other industries, count on the issuance of stock options as a major source of compensation for its employees, from executives to rank-and-file workers. In Cisco Systems Inc.'s case, for example, its top 25 executives receive less than six percent of the total number of options granted, Cisco Chief Executive John Chambers said on Tuesday. Cisco and Microsoft Corp. have both weighed in, saying they won't treat options as an expense. But other companies have said they will account for stock options as an expense, such as Coca-Cola Co., General Electric Co. and General Motors Corp. At the same time, some of those companies have said that accounting for them accurately will be difficult, because the imputed value of stock options varies so much with the market. [Harry: I can't believe the executives of tech companies don't get it still after all that has happened over the last 2 years. The reality is that options dilute the value of the company. At the end of the day, if a company issues options and the exercise price is well below the current trading price, the company needs to issue more stock or go and buy it on the open market. Essentially the shareholder are taking of loss either through dilution or through a direct expense by the company. Even if they get away with this because they are the biggest tech companies and they know mutual funds will not drop them over this issue, they will pay the next time they ask for stockholder approval to raise the number of shares outstanding. I know I won't vote to approve. I think people want greater visibility in who is getting compensated and by how much. If the rumors are true some tech companies may have diluted their companies by 25 percent. I also don't agree about re-pricing options. The employees were given the optons when the time were good so the price is high, if the price of the stock falls then they were partial contributors to the failure of the company as well as the success. Options are given as an incentive to achieve good company results. If the result are lousy they should suffer with the stockholders. It is no different from a stockholder buying in at the peak. The company always has the option to issue more options are lower price comenserate with the performance of the company. It would be the equivalent to dollar cost averaging a losing position for an investor. The excuse has been given that they need to re-price to retain employees. In the current environment where are most employees going to go? As it stands long term employees are being shown the doorr because once successful programs are being cut.]