Valley takes a new look at stock options


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Published in Mercury News January 2, 2010 by Pete Carey
Stock options may be the gas that Silicon Valley runs on, but two years of falling stock prices left a lot of tanks on empty last year. Yet as it heads into a new decade, the valley’s options culture remains surprisingly resilient.
The answer for some companies in 2009, including Google, Intel and eBay, was to hit the reset button by exchanging options that became worthless (or were “underwater”) because of the falling stock market for ones that reflected the new, lower share prices.
Options give workers the right to buy company stock at a preset price, offering them the opportunity to profit if those shares increase in value.
For companies that did not do an exchange, the improving economy and rising share prices helped take care of the problem, lifting many options near or above the water line.
A study by Equilar, a Redwood City compensation consulting firm, shows options of top officers at 140 valley companies gradually surfacing above water during the last half of the year.

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