in July to end its stock-option program for employees in favor of restricted
stock grants is not swaying other North American companies to follow suit, according
to survey results reported by WorldatWork, a nonprofit consultant.
Indeed, only 2 percent of survey respondents indicated that
the Microsoft decision had a “significant effect” on their companies’ philosophy
regarding stock options, WorldatWork reports.
A huge majority, 63 percent, said the announcement
had no effect on their stock compensation philosophy; 25 percent indicated it
had a minor effect; and 9 percent said it had "somewhat" of an effect.
In contrast to the Microsoft announcement, the possible mandating
of stock option expensing by legislation or regulation would affect companies’
use of stock options. Only 13 percent
of respondents said they would not change their current practices regarding
employee stock options. Thirty-six percent
(36%) said they would switch to restricted stock if they were forced to account
for stock options as an expense. Other responses included scaling back stock option
grants, using more cash as a reward, and shifting to other long-term incentives.
Sixty-one percent (61%) of compensation professionals believe
stock options should not be expensed, compared with
only 29 percent who felt they should. Eleven
percent (11%) would support expensing under certain circumstances, such as through
a fair and accurate valuation method. In response to a different question, 11 percent
of companies had a shareholder proposal to expense stock options in 2003, with
42 percent of those proposals passing.
The survey, conducted in July 2003, polled 413 WorldatWork
members who work in the human resources departments of the Fortune 1000 companies.