When it comes to expensing stock options, Intel ( INTC) keeps playing it both ways.

In its 10-Q released Thursday, the company threw investors a bone by offering new details on who receives options, and how much the grants dilute shares outstanding. But it's not clear investors will be placated, because Intel still refuses to say on a quarterly basis how much options bite into profits.

To uncover that information, they'll have to excavate the footnotes of the company's annual report, coming sometime next spring. And no wonder Intel relegates the details to small print: Its most recent 10-K showed that if it had expensed stock options, profits for 2001 would have nosedived from $1.3 billion to $254 million.

It's not surprising, then, that while the company is clearly under pressure to dish out more information, it wants to focus attention on anything but how much its options actually cost.

In a prepared statement accompanying its Securities and Exchange Commission filing today, CFO Andy Bryant argued that the debate over the use of stock options is "misdirected." His take: the problem isn't that companies dispense generous portions of options, but that in some cases, the rewards skew disproportionately to the highest-level corporate officers. "Rather than focusing on the accounting for broad-based employee stock options, the debate should center on excessive executive compensation," said Bryant.

In fact, Intel's distribution of options looks pretty democratic, compared with some of its competitors. In 2001, it granted 0.8% of options to its five best-paid executives, according to the Investor Responsibility Research Center, an independent group that studies corporate governance issues. In contrast, a survey of 320 tech companies by the center found that top execs scored an average of 19.4% of grants.

By focusing on executive compensation, Intel "is attempting to appeal to a fairness issue," says Carol Bowie, the Center's director of governance research. "They're attempting to demonstrate to investors that the options are well spent because they're enabling them to compensate their employees."

But from the investor standpoint, it's not clear that matters much. Options still represent foregone profit, regardless of whether management or the rank-and-file get the grants.

"What I care about is that they exist," says Paul McEntire, who manages the Marketocracy Technology Plus fund. McEntire does his own analysis of how options grants could affect earnings, so he says it wouldn't really matter much whether companies like Intel began recording their quarterly impact. (Intel, he adds, has used options responsibly, unlike some other tech companies).

But retail investors aren't equipped to apply the same level of sophisticated analysis as fund managers, which involves making judgments about factors like a stock's volatility.

Options' Effects on Share Dilution

In another bid to distract investors from how much options cost, Intel has sought to draw attention to how its grants dilute shares outstanding. By this measure, it looks more shareholder-friendly than its peers.

Last year, Intel's share dilution resulting from option grants amounted to 14.7%, according to the Investor Responsibility Research Center. In contrast, the average semiconductor company saw dilution of 20.3% in 2001.

Compared to tech companies with a market cap greater than $5 billion, Intel also looks more frugal. Last year, dilution at those companies averaged 19.7%.

Dilution figures represent outstanding options grants, plus shares available for future grants, plus any new shares requested in 2001, all divided by the total number of common shares outstanding. However, they don't take into account options plans that weren't approved by shareholders. Starting this year, the SEC will require companies to make that information public, which could change share dilution figures at many companies.

While the latest disclosures are useful, the bottom line for retail investors is that Intel still refuses to 'fess up to how much options cost each quarter. With the "everybody's doing it" argument fast losing appeal, investors may not be that impressed by the fact that Intel compares favorably to peers on measures like share dilution.

"The momentum right now is headed toward some kind of expense recognition for stock options," says Bowie, whether that comes voluntarily or through regulatory fiat. Investors simply want to see more discipline in options grant programs, she says, and until companies actually have to record a cost on their P&L, that discipline is likely to be in short supply.