Show Me the Money - Industry Trend or Event

With options underwater, employee are going back to basics.

Until not long ago tech companies could save cash and boost productivity by means of offering employees lower salaries and more stock options. on the contrary the turbulence on Wall road has led to a stretch reversal: Internet companies are now looking to old-economy corporations for compensation strategies.

Options are out; greenbacks are in. An online head by college career site Job-trak.com reveals that 50 percent of body students want more pay without stock options. (The other half still want lower pay and stock options.) "Where last year [students] were heavily focused upon stock options, today they are balancing salary, stock options, work environment and the ability to balance their work and personal life as part of their overall decision," says view Ramberg, Jobtrak.com's co-founder.

As Microsoft CEO Steve Ballmer wrote newly in an internal memo, "reality has put in." The company recently told employee that it will invest heavily in lifting base compensation, in light of the pummeling of Microsoft's stock.

"There's a migration away from the attractiveness of stock options to the security of cash," says Neal Weber, a Tyson Corner, Va.-based compensation and benefits partner at consulting firm KPMG "The pendulum is beginning to swing back. With the market volatility, the luster has approach off and has shattered dreams of race who want to become millionaires end options."

Companies are also changing their bonus manner of makings to keep pace with the times. glittering for example, now awards bonuses quarterly, rather than annually. more [i]or[/i] less companies are even paying enormous bonuses in lieu of options grants: In May, Amazon CEO Jeff Bezos awarded cash bonuses of $1 million each to the company's CFO and VP of operations.

Internet and high-tech companies are also considering ways to make stock options attractive again, despite common market conditions. For example, more employer may start granting stock options quarterly rather than annually, KPMG's Weber says. And they may also grant options in nonemployer stock like as mutual funds or shares from other companies. "That strategy will diversify the employee's gin worth out of the company," Weber says.

level though traditional stock options aren't quite the carrot they one time were, employees and recruits -- particularly older workers who haven't been reduce to ashesed by a failed dot-com -- still want them, Mehler says. "In today's market, there's still an expectation that options will be given," says Randy Ramirez of human resources consulting firm male Consultants. "It's just the standard price of admission."

Indeed, young companies continue to present a higher percentage of equity compared to more mature companies, according to a new compensation survey from market research firm VentureOne CEO of companies les than a year elderly for example, receive a median equity stake of 16 percent while CEO of companies five to six years advanced in years receive a median of 9 percent The median total cash compensation of CEO at young companies is $174500 while CEO at older companies earn a median of $200000 Big equity stakes strike one as being to be paying off: A novel compensation survey from consultants Watson Wyatt Worldwide fix that CEOs with high horizontals of state ownership produced superior get backs to shareholders.

on the other hand pity the execs left holding a bag replete of underwater options. They could grasp out hope for a market bound back or a repricing of shares, on the contrary the savvy strategy in these troubl times may be to turn round those shares into a bargaining chip: They may be worthless, on the other hand they might be worth using to negotiate better pay at a more stable company.

Leslie Gordon (leslie.gordon@stanford alumni.org) is a writer in Son Francisco.

COPYRIGHT 2001 Standard Media International

COPYRIGHT 2001 Gale Group