That adds cost for the company. There are ways to avoid the extra costs, say compensation experts. That's the amount of time a company must wait to avoid extra expense charges under the new accounting rule. Sprint Chairman and CEO William Esrey and President Ronald T. LeMay were excluded from the option cancellation program. But despite Sprint's falling stock price, the two executives received big option awards at lower strike prices under new contracts.
Companies also are forgiving loans made to help executives exercise options, pay experts say.
The board at Compaq Computer Corp. gave Michael D. Capellas, who joined the company in 1998, a new contract when he became chairman last year. The big decline in the stock market has sparked a new debate over whether the stock-option compensation system needs to be retooled. But James F. Reda, in the Atlanta office of New York-based Buck Consultants Inc., says he thinks it should refocus attention on a more fundamental issue. Regardless of whether compensation is in options or cash, many companies need to rethink how much they need to spend to lure and keep top talent. He says he doesn't believe so much needs to be paid to keep people where they are.