By Cydney Posner
This article in the WSJ, "Stock Options Face Extinction," reports that "stock options are disappearing as companies gravitate toward restricted stock awards. The trend is a result of shareholder demands, tax-law changes and the financial crisis, which has left many employees holding worthless options….In 1999, stock options accounted on average for about 78% of long-term incentive packages. That figure fell to 31% last year and is expected to shrink to 25% in the next two years, according to consulting firm James F. Reda & Associates." Underwater options "can hurt employee morale," almost working in reverse, according to one CFO quote in the piece. In addition, "because restricted shares are worth more to start, [a company] can give fewer of them than options, avoiding shareholder complaints about dilution of their holdings."