IBM, the world’s biggest computer services group, is overhauling its approach to stock options in a move that is expected to spawn a legion of imitators as companies seek to distance themselves from the options “backdating” scandal sweeping the United States.
The computer group, which is not among the 190 companies so far implicated in the backdating inquiries, will stop granting options to outside directors as part of a company-wide effort to reduce its reliance on this incentive. Instead,it will double the “annual retainer” fee it pays non-executive directors to $200,000 (£102,000) a year.
The move is intended to encourage directors and staff to focus more on the long-term strategy of the company than making a quick profit on their stock options, which can sometimes be cashed in within months.
James Owers, a professor of finance at Georgia State University, said that it would also enable IBM, a company known for its high standards of corporate governance, to distance itself from any perceptions of impropriety.
Mr Owers, who is writing a book on the subject of stock options and accounting restatements, said that the move appeared to be pre-emptive. “It not only signals that IBM is not involved in the backdating scandal, which is a clever public relations move, but also that it has little interest in any compensation that would leave it vulnerable to the unsavoury issues surrounding stock options.