Executives at IBM Corp. will have a new string attached to their stock options - they can cash out only if the company's shares have risen more than 10 percent, Big Blue announced Tuesday.
IBM executives said the decision, approved at a board meeting and set to take effect immediately, would ensure the company's top 300 executives could reap stock option gains only if the company delivered significant value to investors, spokesman John Bukovinsky said.
The rule means an option's "strike" price - the price at which company stock can be bought at a certain point in the future - will be set 10 percent above the market price on the day the options are granted. For IBM executives to still get market-priced options, they must also buy stock at the same price with their own money and hold it for at least three years.
News source: News Observer