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Author: mathetes Big red star, 1000 posts Old School Fool Motley Fool One Everlasting Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 2049  
Subject: Re: Option grants - how often, how many, how muc Date: 9/11/2007 10:46 AM
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AliFool: For those of you with companies who grant stock options...

I'm retired from one of the larger companies, one that began in the 1950s to grant options to all full-time employees. ALL. That was (and remains) very unusual. Whether they still do it now -- I've been retired for about five years -- I don't really know for sure. Like many companies, it's gone through some hard times, so there's reason to think that such practices might have been examined.

But during the last half of the 20th century it was not unusual for production line workers and secretaries to retire as millionaires, if they were smart enough to hold on to those shares they received in the form of options exercised.

does your company grant a large amount that vest over a period of yeara? Do you also typically receive new grants each year (for example, around the time of your raise/performance review), or is the initial grant it? Or, perhaps you receive grants as bonuses or special awards?

Again, I can only respond in terms of what once was ... and I don't hold out this company as representative of all (in fact, from what I gather in talking with friends who worked for other major multinational companies, we were quite possibly unique) ... the grants typically were granted in mid-year, quite disconnected from annual performance reviews. They vested two years after granting, and were exerciseable for up to ten years after the date of the grant. The amounts were a function of one's pay grade, for the most part, especially at the lower levels ...

The key to this whole thing, however, is that stock option grants like this are part of a big picture that comprises many different incentives and benefits. The goal of options in particular is to give each employee (or each who receives them) a motive to do all within his or her power to help the company succeed over the long run.

Am also curious to know what a typical grant amounts to (for your average individual contributor on up)... either in number of shares, total worth of the grant, or some combination thereof.

I don't think there IS a "typical grant amount" -- not surprisingly whatever is granted would be smaller at lower levels, get larger as you go up the hierarchical levels of the organization. The rationale for that is that those who have (in general), by virtue of their positions, the greater ability to influence the value of the stock, also should benefit more as the price increases.

Most of the grants that were made in the last decade in this company (the one from which I'm now retired) are, in the jargon of options, "under water," meaning that those who received the largest grants are also those who are losing the most ... in unrealized value.

So it goes ...

(Hope that helps a bit).

mathetes
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