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Amazon Grants Workers New Options Amid Stock Downturn

August 03, 2000|From Reuters

SEATTLE — Inc. said Wednesday that it has granted new stock options in a move designed to reward and retain employees following a steep drop in the online retailer's share price.

Last Friday, Amazon Chief Executive Jeff Bezos said in an e-mail to employees that a special one-time grant to buy stock at $30 a share would be given to workers who joined before July 24, 2000, and whose original option exercise price was higher than $29.75.

The special grant follows a downturn in Amazon stock, which tumbled from its 52-week high of $113 last December to a 52-week low of $27.88 last Friday amid growing market wariness toward online businesses--and after its latest financial results failed to live up to some analysts' expectations.

Amazon's stock rose 56 cents to close at $30.81 on Nasdaq.

The new options were granted "to take advantage of current market conditions," Amazon spokeswoman Patty Smith said.

"It will have the effect of boosting morale, but it wasn't done for that reason," Smith said. "This is a way for the company to reward employees for all the hard work they've been giving."

Amazon is not the first Seattle-area company to fight a falling share price with new options.

In April, Microsoft Corp., trying to soothe worker worries about a 40% decline in its own share price, declared that all employees would be given new stock options set at a new, lower level.

Many technology companies use generous options packages to lure employees with the prospect of a big payback in the stock market. Both Amazon and Microsoft famously created droves of millionaires as their share prices skyrocketed.

"In an increasingly competitive market, it's a good way to attract and retain employees," Smith said, adding that she was unsure how many of Amazon's 7,500 full- and part-time employees would be affected by the new options.

Amazon has not reported any hiring difficulties, but last week its president, Joseph Galli, abruptly walked away to head up Web marketplace operator VerticalNet Inc. Galli had collected millions of dollars in pay, bonuses and options during his year at Amazon.

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