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

To: rkral who wrote (174512)	5/12/2003 4:57:59 PM
From: Saturn V	Read Replies (1) \| Respond to of 186894

ref , "intrinsic value method" and a "fair value method" of option expensing> Companies like Intel are already expensing options at the "intrinsic value method". This amount is zero. "Under the intrinsic value based method compensation cost method is the compensation is the excess if any of of the quoted market price at grant date over the price the employee must pay to acquire the stock". Since the amount is zero, the option bashers are up in arms. The Black Scholes method is the "fair value method", since that is somewhat closer to the market price of the option. However I believe the FASB ruling is applicable to computing employee compensation. So most company do not give out options below market price, because the IRS would immediately value the option by the 'Intrinsic Value Method', and the employee would be taxed right away, making the option to be an employee disincentive. The dilution method is not discussed in the FASAB link. Warren Buffet and other people in smokestack industries do not like stock options. In a similar vein, I once met a prominent foreign magnate, who buys up steel mills and ancillary industries. I asked him why did he not invest in HiTech. His answer was 'The value of a High Tech Business is not the Plant, Capital, Equipment or the Customer Base. The Value is the intellectual property in the heads of its people. I do not know how to manage and control that. So I completely stay away from HiTech.' The bottom line is that the Stock Options are the best known way to manage HiTech Industries.