Stock options are not much use as incentives if the price at which they are exercisable is dauntingly out of reach, so IBM Corp is offering a new stock option plan for mid-to-senior level executives – chairman Louis Gerstner offered the plan due to concern about keeping managers at IBM and motivated: the plan is aimed at the tier of about 1,200 managers just below the most senior level, will offer new options for old ones that were exercisable at prices ranging from $89 to $169; the new options are exercisable at $47.88, and managers will have to swap anywhere from 2.5 to 10 old options for one new one, depending on the original option price; the options are exercisable after two years and the price must rise 50% above the $47.88 level to $71.82 and stay there for 30 days; only 50% of the options can be exercised the first year, and 25% for each year after, but the terms do not look particularly attractive.
