Amid growing scrutiny of its free-flowing stock options program,

eBay

(EBAY) - Get Report

has apparently decided to turn down the spigot.

In recent quarters, the online auction company has slowed the growth in its options grants and begun to decrease the number of options it gives out on a per-employee basis. eBay estimates that this moderation has had an effect on its bottom line -- or would have, anyway, if it expensed options.

In the first quarter, for instance, eBay's options grants cost it half of what they did in the same period a year ago, the company estimated in its quarterly report filed on Monday.

Company representatives did not return a call seeking comment.

To be sure, the moderation of eBay's options program doesn't mean the company is a latter-day convert to the antioptions camp.

eBay's options program still carries a large cost to shareholders. If the company expensed stock options, its first-quarter earnings would have been $184.64 million, or about 8% lower than its reported $200.1 million in profits.

Meanwhile, the company was able to come up with a lower estimated cost of its options program, in part by changing some of the assumptions it used to value its grants.

And eBay shows no signs of radically restricting its options grants. In fact, for the

second year in a row, the company is

asking shareholders to massively increase the number of shares in its options pool. At the same time, the company is fighting off a shareholder proposal that would encourage it to include options expenses in its income statement.

But the moderation of its options grants indicates that the company may be paying some heed to its critics.

In its most recent quarter, eBay awarded a net grant, which excludes canceled options, of 13.6 million shares. In the year-ago period, the company awarded a net grant of 12.9 million shares.

eBay had some 5,700 employees at the end of 2003, which means that it granted an average of 2,386 options per employee in the first quarter. The company granted its 4,000 employees about 3,225 options each, on average, in the same period last year.

In all of 2003, eBay awarded a net options grant of 21 million shares, down from a net grant of 23.7 million shares in 2002.

The grants in the just-completed quarter were worth about $15.99 million, down from $29.64 million in the first quarter last year, the company estimated. eBay's options grants in 2003 were worth an estimated $201.78 million, according to the company, up about 4.6% from the estimated $192.90 million in options it handed out in 2002.

But the company's estimates may be open to question. In calculating the value of its options grant this year, the company assumed that its stock would have far less volatility that it assumed last year. Like last year, the company also assumed that the options would have a shelf life of only three years. Such assumptions tend to decrease the estimated value of options.

Indeed, the company's past estimates may be hard to square with the real value that eBay employees have seen from options. Given the company's figures, eBay estimated that it awarded its employees about $2,800 each in options in the first quarter, down from about $7,400 each in the first quarter last year.

Put another way, the company's estimate implies that each option was worth just $1.18 a share, down from about $2.30 a share last year.

But employees have seen far more from options than that. In the first quarter, for instance, eBay employees gained an estimated $218.97 million by exercising their options. That works out to be about $38,415 per employee. Given that employees exercised some 5.8 million shares in the quarter, workers saw an average gain north of $37.75 a share.

Although shareholders approved eBay's options pool increase last year, the plan drew opposition from proxy adviser

Glass Lewis and influential investors such as the

California Public Employees Retirement System.

While investors have yet to weigh in on this year's plan, the International Brotherhood of Electrical Workers Pension Benefit Fund has submitted a proposal that would urge the company to expense stock options.