We need to hit very tough goals to get bonuses. Boards may cut pay Consultants think the fallout from the faltering stock market and economy may be more pronounced a year from now, when CEO pay packages for 2001 are reported in proxy statements. Boards of directors generally hammer out packages in the first quarter. Last year, that was before the market tanked and the economy softened. This year, the pain was palpable.
Stock options are the right to buy shares at a set price at a certain time.
If the stock rises, the difference between the grant price and the stock price when the option is exercised is profit. If the stock price falls below the grant price, the options are virtually worthless. With the stock market in a bearish mode, many boards of directors are crafting new pay packages to retain top executives, said McGurn and other observers. Some are using megagrants of options, so even small stock price movements will have big rewards. Some have tried complex techniques to resuscitate existing grant programs.