By Sally Watson, 3 September 2001 08:01
NEWS The downturn in market conditions is forcing high-tech firms to reprice in-house share option schemes to hang on to key employees. A survey by Legal Director Magazine and law firm Taylor Joynson Garrett found over half of companies in the UK's technology, media and telecoms sector have already altered option schemes to fit current market conditions or plan to do so within the next year. Repricing in-house schemes is likely to anger outside investors who bought shares at much higher prices before the market downturn. The market capitalisation of the companies surveyed has fallen by an average of 35 per cent since flotation. According to a report the Financial Times the Association of British Insurers has already expressed concern, remaining sceptical that altering option schemes will act as a sufficient incentive to retain staff. Taylor Joynson Garrett predicted the changes will focus firms on rewarding key employees, meaning fewer staff will be included in schemes in the future. A survey from PricewaterhouseCoopers last year found the slump in dot-com shares has taken the shine off stock options for most staff. PwC found that many firms were being forced to move towards non-cash, performance-linked packages to retain staff, including cars, holidays and health benefits.
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