Stock Options Could Disappear If Shares Run Out

Stock options, onetime king of compensation, face a new difficulty: Companies are running out of shares. According to a survey of 175 technology companies by Deloitte & Touche, 72% expect to run out of shares to grant to employees within two years and will have to either approve more shares or switch to other forms of compensation, such as restricted stock.

Broad-based stock options, a Silicon Valley staple, have come under pressure from accounting groups that want them to be expensed, employees upset that their options are worthless, and shareholders who see options diluting their stake in a company.

Says Ellie Kehmeier, deputy national tax leader at Deloitte & Touche, "We're seeing a partial shift away from the historic culture of the tech community, which is to grant equity to everyone."