Business executives earn hundreds of millions less from stock options
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Finnish companies paid out EUR 325 million less in revenues from stock options last year than in 2002.
The decline in income from stock options has continued since the turn of the century. Income from employment-based options has come down by more than 80% from 2000, when the incentives brought a total of more than EUR one billion to those who held them.
Experts attribute the collapse in income from stock options largely to Nokia, whose stock option incentives, which were introduced ten years ago, have reached a turning point. Nokia’s stock options have lost almost all of their value, as conditions have become more difficult, and Nokia’s share prices have declined.
Professor Seppo Ikäheimo at the Helsinki School of Economics says that Nokia’s best-yielding stock option systems are too loose by today’s standards.
Now Nokia is considering a new incentive system, in which employees would be offered shares in the company, if goals linked with turnover and result per share are realised. The new system is unlikely to produce the massive windfall profits that the stock options once did, but shares of stock retain at least some of their value even if prices fall.
The stock option systems were brought to Finland by Alexander Corporate Finance. The company’s CEO Yrjö Kopra says that the options made it possible for certain managers in Finland to admass unprecedented wealth.
"At the same time it was possible to keep the top talent working for Nokia, for instance", Kopra says.
The tax statistics for 2003 also indicate that overall income from capital gains increased significantly in 2003. Less than 1.5% of income earners amassed half of all capital income last year.
Helsingin Sanomat
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| 13.12.2004 - TODAY |
 Business executives earn hundreds of millions less from stock options |
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