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

To: GVTucker who wrote (172981)	2/10/2003 4:32:34 PM
From: kapkan4u	Read Replies (1) \| Respond to of 186894

<But the company is giving away something of value. That is unquestionable.> Yes, options granted are extremely valuable. Just check the current quotes on INTC at the money ($15) calls expiring in Jan 2005. They are trading at almost $5 a share. They expire in less than two years. Intel gives away at the money options that expire in 10 years, which makes them much more valuable than the two year ones selling for $5 on the open market. I would guess that the value of a 10 year at the money call would be at least $10 and probably quite a bit more. Kap

To: GVTucker who wrote (172981)	2/10/2003 5:52:43 PM
From: The Duke of URL©	Respond to of 186894

If the company gives shares outright to its employees, as you suggest, there is no cash outlay but the gift defeats the purpose. There is no incentive for the employee to continue to perform, he has already received the consideration in his pocket. An ESOP (an Employee stock retirement plan) is a way to give stock, but it does not vest (permantly belong) to the employee until a condition is met, usually retirement after years of faithful service. Termination of the employee for cause usually results in termination of non vested stock, and forfeiture. It also costs the company no cash. But the concept of a corporation in business is that of a separate entity from the shareholders. The shareholders collectively own the corporation the are NOT the corporation. This is the way the law and the tax and the investment works. A corporation has been a separate entity from it shareholders for 4 or 5 hundred years now. A shareholder loss is NOT a corporate loss. No matter how emotional the argument. It is a disclosure issue, not a profit and loss issue. It is a balance sheet item not an income item. It appears on the balance sheet not on the income statement. Accountingwise. There should be disclosure when and how the option is granted not to wait until the stock option is exercised or the stock sold. But the interests should be aligned. That is why this new dividend tax exclusion rule would be so beneficial. It will tie the profit interest of the corporation much more closley with its shareholders. Don't you agree?