Silicon Valley Loses the Keystone of a Golden Age

Many of the letter writers said options allow them to enjoy a middle-class lifestyle they otherwise would be unable to afford, adding that they feared that the accounting change would prompt their employer to cut back on options grants. (For more on the shifting debate about expensing options, click here.)

"There is no way I could have afforded my modest home without having my options available to me," wrote Kristin Frost, who has worked at Cisco for nearly nine years.

She said the prevailing "sense of ownership and commitment" at Cisco comes from stock options, helping explain why "the parking lot is still half-full at 7:30 p.m."

In fact, Cisco is already reducing the number of options that it grants each year, with grants of 199 million options in the year ended July 2003 compared with 282 million the year before. And Cisco workers aren't the only ones who should be prepared to settle for fewer options.

Publicly, technology companies that use options will only say that they're studying the draft proposal on options expensing. But the industry trade groups leading the charge against it say that if it goes into effect, companies will reduce the size of their options programs. And because tech outfits award most of their options to employees below the top rung of management, rank-and-file workers would be hardest hit.

Semiconductor companies grant about 80% of options to rank-and-file workers, according to its industry association. But if required to expense options, Semiconductor Industry Association President George Scalise has said chipmakers are likely to cut programs that award options to more than half the workforce.

A survey of 421 technology firms in January 2004 found that 7% planned to make fewer workers eligible for options grants within the first quarter of 2004. An equal portion said they would cut the size of their options grants, said Tim Brown, vice president at Aon Consulting/Radford Surveys.