Replies to post #4513 on Intel Corp (INTC)

[sgolds]

DewDiligence, you show an amazing lack of understanding of the theory of employee stock options.

First, stock options are used to encourage loyalty and retain good employees in times when the company has problems. Companies want to retain the good employees and fire the unproductive ones. If you just gave options when stock prices are high then what is the incentive for good employees to stay? Under your scenerio, good employees will leave and the company will be forced to retain the unproductive ones since everyone else already left.

Second, most stock options grants come from secondary offerings, not from purchasing stock on the open market. Thus the cost to the company is zero (although the shareholders agree to a dilution cost). So, for most option grants, the company buys for zero and sells for a fixed amount - not a bad business model.

Intel was maintained as a great company through its intellectual capital - its people. Without stock options Intel would not be nearly the stellar investment it has been over the years because quality people would leave. I know many employees who were long term contributors to Intel primarily because they wanted to vest the options.

So, if you've made money on Intel over the years, you can thank stock options. Even the ones that used stock purchased on the open market. Don't think of such money spent as a loss, rather think of it as a sound investment.