Computer Sciences Corp. will reissue employee stock options to motivate workers to remain with the company. Employees with stock options giving them the right to buy stock for $70 will be offered the option of exchanging them for an equal amount of options that will be granted next year at market price. The company has 170.3 million shares outstanding, and 17% of 14.7 million outstanding options are eligible for the program.
For the employees, it makes the options meaningful again: Like many technology companies, CSC has seen its stock prices plummet during the last year. Its stock price closed at $37.70 Monday, down from a 52-week high of $74.93. But shareholders often grumble about such deals, since investors who bought at, say, $74, want employees motivated to get prices back above that level.
In the last two years, stock options had been seen as a promise of quick wealth. That view is changing, but stock options still have a place in compensation structures, Meta Group analyst Maria Schaefer says. "Options are to keep salaries down and compensate employees when the company succeeds," she says. "Companies have to offer incentives or face losing their talent pool."
The service provider will release its second-quarter earnings Thursday.