Over the past few years more old-line corporations across industries that range from banking to consumer products to automobiles are doling out these highly prized perks to employees from the mail room to the board room. Blame the madness on IPO mania. Just a few years ago, only the corporate elite counted stock options as core elements in their compensation packages. These days, college seniors are negotiating options with campus recruiters. Responding to the threat that stars will be lured away by anything Internet, corporate America is moving to grant options to lower-ranking staffers.
Eligible employees stand to gain a lot.
Although stories of soaring stock options are what make them so appealing, the reality is that they aren't worth anything if the stock falls below the option price or if they are never exercised. Carberry claims that the corporate landscape is littered with other options stories about people who squandered tens of thousands of dollars by letting their options expire. Many didn't realize that they could have exercised their options in a cashless transaction and thought they couldn't afford to purchase their shares. Unfortunately, most employers are not doing enough to help workers, particularly those at lower levels, understand how to manage options. So far, less than a third of companies offering options to more than half of their employees distribute comprehensive educational information to their staffs.