Monsanto Puts Bucks Behind the Buzzwords Stock Options Programs on Increase Many Places
Robert Steyer Of The Post-Dispatch, St Louis Post-Dispatch (MO)
Empowerment. Gain sharing. Stakeholder value.
If you work at a big company, you've probably heard these management buzzwords ad infinitum bordering on ad nauseam.
But some large companies, including Monsanto Co., are putting their money - or at least some of their stock - behind the rhetoric.
They're offering employees stock options, the type of perk traditionally reserved for the executive elite.
"This extends ownership to our employees," said Teresa McCaslin, vice president for human resources at Monsanto. "We have been rewarding them for past performance and for near-term performance. We wanted to reward them for the long term."
Options are popular among small high-tech companies, which are long on promise and hope but short on products or earnings. The use of options for the rank-and-file at large companies is hard to gauge.
Some benefits consultants believe that more corporations are offering "broad-based stock options," but they aren't sure how far down the corporate ladder these benefits extend.
Hewitt Associates, a benefits consulting firm, recently conducted a survey in which 36 of 54 corporations said they offered options to employees below the top ranks.
But only four companies offered options to union members, while 20 offe red options to white-collar workers. Just over half of the companies granted options to their overseas employees.
Large corporations started tinkering with broad-based options in the late 1980s and early 1990s, "before the yelling and screaming" over di sparities between executives' pay and workers' pay reached its present volume, according to Charles Peck.
"A lot of employers talk about empowerment," said Peck, who is senior research associate at the Conference Board, a business research organization in New York. "When you get down to the rank and file, stock options have more of a symbolic value - a psychic reward for ownership."
Peck speculated that more companies will consider extending stock options to more workers because they now know that they won't have to take a charge against earnings for this policy.
For several years, the Financial Accounting Standards Board, a national organization that develops guidelines for corporate accounting, debated whether options should be counted as a charge against earnings. If a charge were required, a company with many thousands of workers could take a big hit even if it offered a modest number of options.
But last October, the FASB gave companies a choice: Take a charge or just describe the option program in a footnote to the financial report.
"I think you'll find that more companies are thinking about stock options (for rank-and-file workers)," said Dan Marcus, a partner at Strategic Compensation Consultants in Chicago. That firm helps companies measure performance and develop compensation programs.
The key to success is communication, Marcus said.
"I've seen companies grant options, send out a letter to employees and offer no education or communication," he said. "But Monsanto is making it an event at the company. They're communicating."
At Monsanto, 27,000 employees are eligible for options to buy 200 shares of stock apiece. The exercise price, after the company enacts a 5-for-1 stock split next month, will be $30.34 a share. …