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To: Paul Engel who wrote (28387)	7/20/1998 12:43:00 AM
From: Joe NYC	Read Replies (3) \| Respond to of 33344

Paul, If Intel employees "get rich" off of stock options, then that means Intel's stock has gone up. Ergo, I will have done "OK" as well. That has been true, but going forward, the number of option holders and number of shares have grown, and more and more of them become vested. What it really means is that for every dollar that the stock goes up, the hidden liability of the company goes up. I actually looked it up on Friday in the 10K. The info reported to SEC is somewhat old, but it is interesting to lookup the numbers. The Edgar site is down, so I have to go by my memory. There was a number of shares that are vested. I believe this number of was 57 million. The average strike price was in single digits. Multiply this number by $75 per share or so, and you will get a fairly large number. $4 billion? I guess this means that if they all exercise ther options tomorrow, Intel would be out $4 billion cash. This is money that have been reported to investors as having been earned. That's what my problem is. A company can con investors about earnings, and then use cash that investors think is theirs just to pay regular expenses (compensation of management and employees). If you want to make this thing even more nuts, suppose Intel stops using money for paying suppliers, and just issues options to everyone. The company could "earn" $6 billion per quarter. If you don't know how much money leaked to the option-holders, or by how much of the leakage has accrued, you don't know how much the company really earned. Another interesting number was total number of shares needed for all outstanding options. I believe it was 179 million with average price in somewhere in teens. If you multiply this number by $65 to $70, and I get about $12 billion, or more that cash on hand. Suppose the company goes back to it's all time high $102, or plus $20. The option liability would increase by 3.5 billion. I hope they [employees] all get richer and richer ! There is no free lunch. Someone has to pay them. And it is exactly the long term investors who pay. Joe PS: Replace Intel with company ABC, because I don't want this to turn this into another Intel vs. XYZ