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

To: Amy J who wrote (174557)	5/14/2003 9:20:48 AM
From: GVTucker	Read Replies (2) \| Respond to of 186894

Amy, RE: On another note, I'm against expensing options for many reasons, one of which is because it places options on the same level of treatment as cash, which means an exec can run to their boards and say, "hey, since options cost the same as cash, there's no reason for teh company to give this to me in options, I want this in cash." A risk free vehicle. We definitely don't want that to happen - that's what the smokestack companies have - oodles of guaranteed cash, no broad-base ownership, so very two tiered, not a formula for growth. As you know, Amy, I disagree with this. Just because both options and cash are expensed on the balance sheet does not put them on the same level as cash. That is purely an accounting issue. Any exec who ran to the board and maintained that options and cash were on equal grounds would be countered by the exact same pro-options arguments that are being used now. Options allow the employee to share in the success of the company and the ownership keeps employees tied to the company, and it is a great method for younger companies to conserve cash and still reward good employees. And after making those counter arguments to the exec, I'd probably fire him for having such a short sighted view. A few years ago at Intel, there was a divisional manager that proactively jumped in to save another division, I bet because he didn't want to see his stock tank -- otherwise, what's the incentive to stick your nose into someone else's business? Stock makes it your business. If that was truly the divisional manager's motivation, then I'd question him. His actions probably had very little effect on the stock price. Outside of a group of perhaps 6 or so senior execs, no one else at Intel has an effect on the stock price of more than a fraction of a penny. The divisional manager's motivation should have been to do what's right for the company because that is his job. Hey, I have absolutely nothing against options. I just voted to have the option pool increase to dilute common shareholders by 10% in a Series A financing. It will be good for the new employees, and thus good for the company and good for me. I didn't ask the founders about their accounting treatment of the options. I don't care. The accounting won't change how the new employees view their options. Accoutning gives outsiders a view of what is going on inside a company. Expensing options makes that view closer to reality. As you note, this has absolutely nothing to do with corporate governance. Sometimes, when the option pool gets too heavy, it can indeed adversely affect an executive's decision making process, but that is a different issue. The market will take care of the corporate governance issue. This process has already started. I really don't worry too much about that. Options expensing attacks a very different issue. Our markets are viewed as the most transparent in the world. Recently, it has become evident that while we might be the most transparent market, it isn't clear enough. Foreign investors, in fact, are starting to wonder if we aren't hiding a lot of things. Expensing options sends the right message to all investors, that the main mission of financial statements is to present a FAIR view of a company, not a biased view. When we send the correct message to investors, that helps every company in the capital markets by encouraging open, active, liquid markets with the maximum number of investors participating. And that is a good thing for Intel.

To: Amy J who wrote (174557)	5/14/2003 1:17:49 PM
From: Robert O	Respond to of 186894

Amy I agree that the 'threat' of big boys leaving in this downturn is mostly a joke. There is no need to throw what will turn out to be tens of millions per year to retain each upper level mngmnt. that's why I esp. agree with: it's okay for comp committees to let an exec walk once in awhile, tends to send a message to the rest of them to settle down a bit until the company is out of the woods. Sometimes a person has to let the one that chomps at the bit too much go because there's always a greener pasture on the other side of some fence. Only caveat to you is beware of using too many trite phrases in your writing (can make you sound like a Kellogg grad lol). In this item h) alone you have at least three: >out of the woods >chomps at the bit >greener pasture on the other side of some fence In actuality for the 2nd phrase, correct usage is 'champing at the bit' not chomping. Keep the fresher insights coming though. RO