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Intel confirms accounting changes

Updated Grove refuses to call stock options an expense
Thu Aug 08 2002, 11:35
Update 14:13 BST As expected, Intel formally confirmed these moves below. Andy Bryant, chief financial officer at Intel, said that he and his firm believed that the "current debate over the use of stock options" was misdirected. Instead, he said, there should be a debate on excessive executive salaries. That could be achieved by having more external directors on the board a firm. In fact, Intel more than complies with the suggestions put forward by NASDAQ some two weeks back. Bryant claimed that Intel's five best paid officers only hold two per cent of outstanding stock options. That, he said, reflected Intel's view that stock options "are a powerful tool to motivate and retain employees at all levels".

REPORTS STATE THAT INTEL is set to buck the trend relating to the reporting of stock options in its accounting procedures.

Reuters says Intel will announce today that it will not count stock options as an expense. Instead, the company will seek to provide a different level of detail about its stock-option programmes, which, the chipmaker reckons, will help make executives' remuneration packages more transparent to shareholders.

Company chief Andy Grove reckons that calling stock options an expense won't help shareholders spot when top executives are being over compensated.

Like many technology companies, Intel has been keen on offering staff the option to buy shares in the company at a reduced rate. In the old days, when anything computer related was expected to be successful, the lure of stock options was a tasty carrot in the recruitment process.

Grove has complained, in a recent interview, that the options held by senior executives in some companies are excessive. He says that, Intel's top five executives held 2 per cent of the options granted by the company last year. He says in other companies this figure lies between 18 and 30 per cent.

Grove himself is thought to have earned around $160 million through selling his own stock options, accrued over thirty years with the company.

The decison not to call stock options an expense is the outcome of lengthy discussions between Grove and his accountant Andy Bryant, which Bryant seems to have won.

"He screwed my head up right," Grove is reported to have said. µ

 

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