Silicon Valley Loses the Keystone of a Golden Age

But while the absolute number of options grants are clearly on the wane, few expect top-level tech executives to take a financial hit.

Intel, for example, more than doubled the number of options awarded to CEO Barrett in calendar year 2003, hiking its award to 1.35 million options from 584,000 the prior year. (A spokesperson pointed out that 1 million of the options reflect a special long-term grant that doesn't begin to vest until 2009.) But Intel reduced its overall options grant to 110 million from 174 million, part of a longer-term effort to curb its outsize program.

No one would argue with Barrett's performance as a corporate leader. Under his watch last year, the company showed an 81% gain in net income, to $5.6 billion, while its stock price rose 106%. And Barrett received only 1.23% of the total options awarded at Intel, less than the S&P average.

Still, the bottom line is that while Barrett saw a big reward, average workers ended up with fewer options.

A still-soft job market has shifted the balance of power away from employees and helps explain why they no longer can take options for granted. Take Dell, the computer hardware company. It started cutting back on its broad-based options grants several years ago, judging that it no longer had to award such generous compensation packages in the tech downturn. By fiscal year 2004, the company had pared its annual options grant to 51 million, down from 84 million the previous year and 126 million two years ago.

But in fiscal 2004, CEO Michael Dell actually saw his options grant increase to 800,000, up from 500,000 the year before. Chief Operating Officer Kevin Rollins and Chief Financial Officer James Schneider likewise enjoyed an increase in options grants. Rollins went to 800,000 from 500,000, and Schneider went to 650,000 from 400,000.

That's not to say Dell's top executives didn't deserve a payout. Last year the company delivered 25% profit growth, for net income of $2.6 billion on revenues of $41.4 billion. But recent events at Dell highlight that stock options are likely to be cut at the expense of workers, not higher-ups. (Dell spokesperson Maher said plenty of rank-and-file workers at the company also were awarded bonuses and options in 2003, based on performance.)