FINANCIAL PARTICIPATION
Dealing with underwater stock options
A huge percentage of stock options that were intended to attract, retain and motivate employees are now "underwater" and ineffective, but there are remedies. So says a report in a recent issue of the US human resources magazine Workforce.
With the market price of many share options dipping below the exercise price, reward professionals face major challenges with this once-attractive recruiting and compensation tool.
Don Delves, a compensation and benefits consultant, reckons that it is vital that you consider all the alternatives available. Writing in the January issue of Workforce, he outlines five solutions:
Delves said: "Digging ourselves out of today’ s swamp is only half the battle. Going forward, it’ s important to decrease our lopsided reliance on options and develop better plans that combine a variety of cogent and creative strategies. We need to consider flexible, tailored compensation vehicles that are clearly aligned with the company’ s organisational objectives and desired risk profile."
Want to know more?
Title: "Stock options: Overused and underwater", by Don Delves, Workforce, January 2003.
Availability: Workforce is published monthly. For subscription services, tel: 001 313 446 0450 (USA 888 448 1422). Or contact the online editor Todd Raphael for more information, email: raphaelt@workforce.com.
Take a look at the article online - see what you think. You will need to register to use Workforce online, but it's free. Visit http://email.workforceonline.com/cgi-bin2/DM?y=eKt50DiZN20CKs0BuH30AP
Also, this chart helps you see the pros and cons of each possible strategy (once you open it, you may want to click on "view" and then "zoom in" to enlarge it) http://email.workforceonline.com/cgi-bin2/DM?y=eKt50DiZN20CKs0BuH40AQ
Posted 24 January 2003