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

To: Tenchusatsu who wrote (172968)	2/10/2003 7:06:45 AM
From: Road Walker	Respond to of 186894

Ten, re: 1) Pulling Intel through a downturn is rough, and if the execs can pull it off, more power to them. With >$10B in cash, it's not really too difficult. And without those "other" acquisitions, Intel could have had about $11B more cash. re: Keep in mind, though, that we employees have also received more than our regular dose of options in 2001 and 2002. Hate say it, but I think that is wrong also (sorry guys). Performanced based compensation seems have have lost all meaning at Intel. These guys pulled in bonuses of ~$500K to ~$1M for a lousy year when profits tanked. And they doubled up their option contracts. IMHO, bonuses and options grants should be based on specific performance criteria, if you don't make it, you don't get it. These appear to be "discretionary" performance programs, and I don't see a lot of discretion being displayed. If the stockholders are tightening their belts, maybe the top executives could learn to live on their ~$250K to $550K salaries until things improve. The option grants that I see are too high even in good times. And in bad times, it's unconscionable to "reward performance" the way it's happening at Intel. John

To: Tenchusatsu who wrote (172968)	2/10/2003 8:09:19 AM
From: Amy J	Respond to of 186894

Hi Tenchusatsu, RE:"1) Pulling Intel through a downturn is rough, and if the execs can pull it off, more power to them." Things aren't that bad. This isn't a turnaround situation. This is a dominant player in bad economic times. #1 is void. RE: "2) The extra options are making up for existing options that are now underwater and will probably expire worthless over this decade." Employees could have joined other companies in order to get some options at fair market value (rather than underwater ones), so Intel did the right move to grant new options at fair market value in order to retain talent. Employees should be highly motivated now because they have increased their options, and assuming Dan Niles' 15% growth est is accurate, even their original 5 year options probably won't be underwater for too long. But I can't think of a single private company that wouldn't have made the executives share the pain with the investors a bit more by using a hyperbolic distribution of options (easing up at the top) rather than straight line linear. For example, a factor of 1.25X to 1.5X rather than 2X? If I were a founder of a startup and the CEO had 5% but tanked the stock in half and then received another 5% for his performance for a total of 10%, I'd replace the comp committee and term the CEO. But startups have more control over their valuations than large public companies, so the same principle would definitely not apply to large companies in a climate where Nasdaq has dropped 78%. But probably an easing up formula should have been used, so it doesn't appear like a doubling up (and I know it's not exactly a doubling up given the past 5 year grants are underwater for the execs, but being that I'm bullish on Intel I don't think that's a huge deal for an executive that's ladden in options.) I think Barrett & team have done a great job handling a challenging economy - and they certainly didn't turn Intel into a Worldcom, Enron, LU, United, Inktomi, AMD, etc. So, it's appearances more than anything else, since those options aren't a huge financial issue. But those same Intel executives could have left Intel during the boom and drawn $50m for two years work. Dedication does have value. A company that rotates its executives, has higher risks. Regards, Amy J