Editor's note: Contrary to reporting in a previous version of this article, AMD and eBay both employ value-for-value option exchange strategies, much like Intel's. The Fool regrets the error.
And here we are again: Tech giant Intel
- Unlike Google's repricing, which simply put a new price tag on each old options certificate, Intel plans a value-for-value exchange. More on the intricacies of that later.
- Top executives like CEO Paul Otellini won't be invited to utilize the exchange program.
- Executives won't get pay raises this year, and matching contributions to Intel's retirement-savings plan have been suspended. Intel's people aren't getting this options exchange for free.
These elements make Intel's plan look a lot like the ones followed by Starbucks
Thanks to the value-for-value deal structure, Intel employees will get fewer options than they have now, sans the underwater strike price. The plan shouldn't change anything on the balance sheet, but will reduce the amount of dilutive options outstanding, and increase the chance of employees exercising their options in the future.
It remains to be seen how major shareholders and individual investors react to the announcement. But I believe that the spitballs will be few and far between: Intel's people don't get anything for free, while shareholders recapture some theoretical dilution and nobody owes a huge financial adjustment.
Well played, gentlemen. Now let's see whether that semiconductor rebound is for real, so your employees can get some actual value out of these brand-new options. That's what really matters to investors who don't work for Intel.