Silicon Valley Loses the Keystone of a Golden Age

The developments at Intel and Dell fit with broader trends seen among S&P member companies, which have seen CEO pay jump even as average worker compensation has hardly budged. In 2003, pay packages for chief executive officers of S&P 500 companies jumped by a median of 27%, even though the value of their exercised stock options actually slipped 1%, according to a study by The Corporate Library. The decline in options was offset by increases in salary, bonuses and other perks like restricted stock.

By comparison, the average U.S. private sector worker saw a salary gain of 3% in 2003, as measured by the Bureau of Labor Statistics.

For investors demanding more transparent financial statements, of course, the move to expense options marks a welcome change.

Yet so far, the shift seems to be having an effect that corporate governance reformers didn't expect, tilting benefits toward the top of the corporate ladder. Compensation experts say that's likely to accelerate if more companies begin expensing options.

"If you take options away, net compensation to the rank and file will go down," said Corey Rosen, executive director of the National Center for Employee Ownership. "There's no indication at this point from surveys that most companies will do anything to replace options."

The trend toward more prudent options policies -- and less democratic pay packages -- is one more sign that Silicon Valley is starting to act like everyone else. That's likely to please investors attuned to the bottom line. But for tech workers who came to view options as a virtual birthright, it could mark the end of a long and highly lucrative era.

"I'm frustrated that in this push to punish executive malfeasance, it's really me and my colleagues who get whacked," said Jeff Solof, director of the editorial office for global communications at Sun Microsystems. "Executives will always be well-paid and that's fine; they work hard. But these are programs that reward the rank and file. I'd hate to see that go away."