Mellon Study Shows Decline in High-Tech Options

A new survey of 150 high-technology companies from Mellon Financial Corporation's Human Resources & Investor Solutions group shows that the "burn rate" for options in these companies declined by 30% over 2003, and the overall use of options declined by 15% to 20%. Burn rate refers to the percentage of a company's shares that options issued make up in a year. While options use declined, restricted stock use increased and became more common at more employee levels. On a global scale, multinational companies are tending to localize their plans rather than follow a single corporate template. More companies are also being more selective in their granting procedures. While high-tech companies continue to make most or all employees eligible for options, a larger percentage is basing actual allocation on performance criteria, meaning not everyone will actually get options.

The study, "Equity Practices Survey for the High Technology Industries," is based on a Mellon survey of both client and non-client companies who pay to take the survey. The results are available only to those taking the survey.