Let's say your father is the chairman and controlling shareholder of a publicly traded company. Your two brothers are on the board. You've been an executive there for 15 years, the last seven as CEO.

How much extra incentive do you need to stay in your job and work your hardest?

Well, every little bit counts, apparently, if you're Jim Dolan, CEO of cable TV system operator Cablevision ( CVC).

Dolan was perhaps the biggest beneficiary of a voluntary program at the New York-based cable operator that enables managers and executives to trade underwater options for restricted company stock that vests in four years -- a program that an employee compensation expert calls "a good deal" for participants.

The options exchange program, and Dolan's participation in it, illustrate some of the complexities of employee compensation in an environment in which once-popular stock options have lost their luster.

Though observers once praised stock options as an effective combination of incentive and compensation, they've changed their minds amid two major issues: renewed arguments over whether stock options should be expensed on a company's profit-and-loss statement, and the declining effectiveness of options that have bull market-era strike prices.

Thus, companies such as Cablevision have either exchanged out-of-the-money options for other compensation, or repriced them to bear market levels, in the hopes of restoring their effectiveness. Meanwhile, critics of these trade-ins have commented that executives were happy to benefit, via options, from rising stock prices, but many have shown themselves unwilling to live with the consequences of falling ones.

Fight for Your Rights

Though Cablevision's options exchange program was announced in January, details about executive participation in the program emerged only late last week, in the proxy statement the company issued Thursday evening. (The company is slated to release first-quarter results Tuesday morning.)

Under the exchange program, CEO Dolan traded options or optionlike stock appreciation rights representing 830,000 shares -- some fully vested, some only part-vested -- for an unspecified number of restricted shares vesting in 2007. (Each option was exchanged for half a restricted share, and each right for one-third of a restricted share, but Cablevision didn't specify how many of each were traded in by individual executives.)

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