Worthless Stock Options – And They Called This a Reward?
I can remember my first year at my last company (let’s call it Fancy Fortune 100)) when bonus and raise time rolled around. Management was so excited about the fact that they were handing out employee stock options as part of the compensation package. Oh everyone rejoiced, you’ll make a lot of money on this, it’ll be worth tens of thousands of dollars. People buy cars and boats in cash with their option grants. This week as I shredded the useless paper filled with the options that expired two years from my last day with the company due to layoffs I sarcastically muttered – wow what a load of crap.
I know I shouldn’t complain. During my years there I earned a good salary and did receive some cash bonus awards. It’s not like I was part of the Dot Com bust where people literally were planning on stock options for survival (or at least justification for working 24/7/365). It’s not like I worked for Enron and saw my my 401K vanish or invested with Madoff and lost my life savings. Yet the promise of a job well done sours as I fire up my shredder.
While top executives all over the place have gotten rich on zero-price stock options, worker-bees who have gotten options as compensation over time have played the waiting game of praying that some day the stock price might actually exceed the grant (or striking price) of the paper reward they received. I know for me, over 8 years from when I received the first option, the grant price of the option is still $30-$50 over the price the stock has been valued at during the same time frame. We’re not talking some speculative start-up either but a bona-fide Fortune 100 company that has been around a long time.
For top management this sort of compensation might make sense, but for the regular worker-bee which I was, I wondered then and still wonder just how valuable it is. In that role you truly have a small impact on the company’s ability to please Wall Street and investors.
What has been your experience with stock options? Worthwhile or a bum rap experience like mine? Let me know in the comments…in the meantime I will continue with my shred-fest.
Paula Gregorowicz, owner of The Paula G. Company, offers life and business coaching for lesbians to help you gain the clarity, confidence, and courage you need to have success on your own terms. Get the free eCourse “5 Steps to Turn Fear Into Freedom” at her website
Since I’ve always worked for a nonprofit or been self-employed, there’s never been a stock option. Usually a health package that includes dental is the best you can hope for.
Not quite the same as stock options, but my previous employer had a mandatory “employee stock ownership plan.” For the 8 years that I worked there, 8% of my pay was diverted to buying company stock. When I quit that job and was finally able to sell the stock, I got a grand total of $300. (The company went bankrupt 2 weeks later.)
Let’s just say that, when my current employer granted me stock options, it was hard to get excited about it.
Happy shredding.
Hi Paula – good article. I work in the finance industry and although the determination of our strike price on our options are relatively fair (the closing price of the stock on a particular date one month after Board Approval) I have yet to see our stock rebound to that level – I am still off 30-45%. Fortunately, most of my options are relatively new and I can (hopefully) cash them in for a nice sum. But I agree with you – as a working cog in the machine, I have little direct influence on the stock price to really make a difference. I would prefer a stock GRANT, like our senior management receives. So much better than wishing and hoping…
Yup, I’ve had a couple of rounds of worthless stock options. I remember whwn it was impressed upon me how special this was. This was my favorite tho: I gave notice years ago at Pfizer in CT. I exercised my stock options the month before I leave. Pfizer won’t release, saying that I’d submitted too late. A lawyer told me that I was in the right, but they knew I couldn’t afford to fight them. The broker tried to get me to make up their shortage but I ignored them and they went away.
Ah – so I’m definitely not alone 😉 I think S said it best “it was hard to get excited about it”. Funny that companies and employee motivational experts don’t “get” that. Love the stories – thanks for sharing them.
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I worked for a Dot-Bomb startup that offered stock options and pushed HARD to encourage people to exercise their options. One of my co-workers exercised every option he was offered. I, on the other hand, was pretty skeptical of the idea and exercised none. After I was there for about a year and a half, the company went through a mass layoff, and offered the laid-off employees even more options as a way of trying to raise cash for the struggling firm. Again, I exercised none. In the end, my co-worker ended up without a job, and with a hefty tax liability for the options he couldn’t sell.
A year or two later, the company went completely under, and all those lovely stock options were totally worthless.