Cisco to grant employees options for 141 mln shrs

The recent accounting scandals have taken away an important tool of the high tech industry, stock option grants. According to surveys that I have seen, newly proposed accounting rules of expensing options have taken them away from employees but not executives. Hopefully, Cisco will be leading a trend in the industry. Reuters is reporting that Cisco will grant employees options for 141 mln shrs:

SAN FRANCISCO, Sept 2 (Reuters) - Cisco Systems Inc., the leading maker of equipment that directs traffic over the Internet, on Tuesday said it will grant employees stock options for about 141 million shares, in what is expected to be its main options grant for fiscal 2004.

The San Jose, California company said in a filing with the Securities and Exchange Commission that the options will be granted to employees based on merit, and will carry an exercise price of $19.59 per share.

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Stock options have long been a popular way of compensating employees in Silicon Valley, where many high-tech companies issue them to supplement cash salaries and to provide additional incentives.

During the bull market years of the late 1990s, many high-tech employees became rich on stock options. More recently, stock option grants have become less popular as critics push for stricter accounting rules that would require companies to record the options granted as an expense on income statements.

Although the accounting controversy has led a number of companies to cut back on options grants, however Cisco continues to use options to compensate employees.
'We do believe in broad-based options grants,' a Cisco spokeswoman said on Tuesday.
Cisco, like other heavyweights across the tech sector have strongly opposed looming action by the Financial Accounting Standards Board (News - Websites) rulemaking body, which would force companies to account for employee stock options as expenses.

Cisco said in a filing with the U.S. Securities and Exchange Commission that if it had expensed options in the third quarter ended on April 26, earnings would have been $291 million lower, at $696 million.