Re: Beamer, thanks for the info. This is useful. I'll have to look it over, but I'm still not sure if I agree with Intel's strategy using options as a way of rewarding both employee and shareholder. It still looks imbalanced.
Have a chance to look over the data before you make a conclusion. I can find nothing sinister. In fact, it appears that Intel has larger shifted employee stock benefits from option grants to restricted stock units (or RSU). Although the latter is still dilutive, the grant number is much smaller, so even if they all strike (and most of them should), the dilutive effect will be much smaller.
Note that they granted 30M RSUs in 2006 and 32.8M in 2007. This is compared to 118.9M option grants in 2005. Now, the number of options + RSU grants was 82.3M in 2006, and 57.4M in 2007.
If Intel can buy back more than ~60-80M shares per year, they will beat their own employee compensation rate. Of course, I expect the number of option and RSU grants to decline as the stock price goes up. Taking the average number of grants in 2006 and 2007, or 70M shares, and multiplying it by an average stock price of about $25, you get about $1.75B in costs to prevent the dilution of their employee and management compensation. It will probably stay that much, since in years with higher stock price, the number of grants will be reduced.
The question is, is this reasonable for a $40B company with almost $7B in their most recent year in profits? Intel's dividends have already increased from $2.0B in 2005, to $2.3B in 2006, to $2.6B in 2007. It might be nice to see a $3.0B dividend in 2008, and given the trend, it might be likely, if Intel can continue to raise profits.
Intel's other major cash expenses include CapEx, which is important for company growth and competitiveness. I think rewarding employees and keeping the best minds in the world is also a worthy investment, and if that costs $1.75B beyond R&D costs, then so be it. JMHO.
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