One of the primary forces that fuels this growth is employee ownership. Tellabs' Stock Option Plan Tellabs is one of a growing number of companies that offer stock options to all of their employees. Although the company set up its plan only in July 1996, stock options are already revealing their potential as a motivator. The 1996 grant at Telllabs gave all employees options to purchase 200 shares, along with an additional service grant of 10 shares per year of service. The plan is a nonqualified plan, meaning that employees can exercise their options as soon as they are vested, with the company taking a tax deduction for the difference between the grant price and the stock price at the time of exercise.
Employees pay income tax on the gain between the exercise and grant prices.
It is clear that the financial stake in the company that stock options have given to employees is helping to fuel this growth. Furthermore, Tellabs has always had a lot of informal employee participation and is now taking steps to make participation more formal through various communications vehicles, increased training, as well as business education. The newsletter contains, among other things, messages from employees and managers and describes ways in which employees have improved performance. The company also emphasizes the absolute necessity of training, both for management and nonmanagement. Tellabs believes it is crucial to prepare managers to take the ownership message to all employees and be able to explain how the plan works.