But a survey to be released this week confirms that in the high-tech industry, at least, options have now become the standard, not the exception. Other industries are following high-tech's lead in what amounts to a huge experiment in compensation. The survey, by compensation consulting firm iQuantic Inc., focused on more than 200 technology companies whose stock is publicly traded. But it predicts that in three to five years, general industry will use stock options almost as much as the high-tech industry does today. By offering stock options to large numbers of employees, companies open the door to greater financial rewards than salary alone can offer, but they also give workers a form of compensation that is often confusing and always uncertain.
Stock options allow employees to buy a set number of shares of the company's stock at a set price.
The options become effective over time, usually four years, a process called vesting. If the company's stock price goes up, the employees make money. If it goes down, the options are worthless. Employees aren't required to buy the stock at all, so if it goes down, they don't lose money. But gains from options are much less certain than other forms of compensation.