CNET también está disponible en español.

Ir a español

Don't show this again

Tech Industry

Sun execs get stock options--and stock

Company's top two executives each receive 900,000 new stock options--and because of accounting changes, actual stock, too.

Sun Microsystems' top two executives each received 900,000 new stock options Monday--and as a result of accounting changes, actual stock, too.

Chief Executive Scott McNealy has been an outspoken opponent of the move to require companies to record stock options as expenses that hurt corporate profits. Faced with the reality of such rules, though, Sun has begun awarding restricted stock that gradually becomes available for the owner to sell.

The server and software company disclosed the option and stock grants in regulatory filings Monday.

It's not the first time Sun has awarded restricted stock, but previously Sun has done so only "in limited circumstances," spokeswoman Stephanie Von Allmen said. With the new accounting rules, restricted stock no longer is more expensive than options.

McNealy got 1,354,000 shares of restricted stock, while President Jonathan Schwartz got 432,000 shares, Sun said. The two also got options to buy 900,000 shares each at a price of $3.85 per share, with the options vesting over a five-year period.

Other companies are adjusting to the new accounting regulations as well. Sun, Advanced Micro Devices and others have accelerated option vesting schedules to avoid having to record millions in options expenses. Microsoft decided to drop stock options altogether in favor of restricted stock.

The accounting change isn't easy. IBM's approach has drawn regulatory scrutiny.