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Bank invests in employees
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November 20, 1996: 12:13 p.m. ET
BankAmerica is making employees a little richer through stock options
From Correspondent John Defterios
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NEW YORK (CNNfn) - BankAmerica announced a massive stock option plan Tuesday which affects virtually every employee who works for the company on a full-time or part-time basis. As a result, approximately 85,000 employees are now a little richer.
The plan, one of the largest employee stock option programs in existence, was characterized by BankAmerica's chairman David Coulter as "one of the most innovative and inclusive employee stock ownership programs anywhere in the world." (129K WAV) (129K AIF)
Other companies, including PepsiCo, Merck, Wendy's and NorWest Bank are among those who offer their employees similar plans.
By giving employees a stake in the company, BankAmerica is following a tradition which has been popular with smaller firms for quite some time.
"It is a chance for leadership to demonstrate a direction, "said Bob Freedman, a compensation expert for Towers Perrin, "and have a buy-in throughout the workforce."
Under its plan, BankAmerica employees will be awarded stock options after working as few as 60 hours in the prior quarter. These will be granted in a three-tier distribution system every six months.(see awards chart and qualifications chart)
Through the plan, BankAmerica has an opportunity to build company loyalty and employees have the opportunity to build some personal wealth.
The stock has been a good buy for investors. Its price has increased 50 percent this year, and 100 options granted three years ago at a price of $42 per share would now be worth roughly $5,000.
"I think it's wonderful," said George Salem, bank analyst for Gerard Klauer Mattison & Co. "I think it's a real motivator for the employee; it connects him and turns him on visa vi the stock price, and I think it will motivate performance throughout the masses of employees."(114K WAV) (114K AIF)
The options grants were awarded at 95-1/8, and the stock closed at 98 on Tuesday, meaning BankAmerica employees have already seen a paper profit of nearly $3 per share.
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