Highlighting a trend among large banks, Chase Manhattan Corp. plans to issue stock options to 67,000 full and part-time employees worldwide.
The blockbuster plan, which was announced Tuesday, is designed to thank the company's employees for their help with the recent merger with Chemical Banking Corp., and to inspire them to work even harder, company officials said.
The move follows a similar announcement by West Coast rival BankAmerica Corp. almost a month ago. At the time, many observers called that plan, which will cover 85,000 employees, the most wide-ranging of any bank.
The current plan appears similar in scope. But at least one consultant argued that Chase's program is not likely a direct response to Bank America's program.
"I know big organizations and I know big banks, and they don't do things quickly, said Charles King, an associate at William M. Mercer Inc., a San Francisco-based consulting firm. "I suspect this was being developed simultaneously as BofA's."
Under the plan, Chase Manhattan will issue options for 450 shares over three years to each of its 63,000 full-time employees. In addition, about 4,000 part-time employees will receive options for 225 shares over the same period.
The options will be issued in equal installments at the end of each year. The first options tied to 150 shares for full-time employees and 75 shares for part-time employees were issued yesterday. The exercise price of the first award will be the average of yesterday's high and low price of Chase common stock. The stock closed Tuesday at $87.50, up $2.375.
This is the second time Chase or its predecessors has announced a companywide stock program. The old Chase Manhattan Corp. initiated a plan in January 1994, while Chemical followed suit in June of the same year.
Increasingly, many of the nation's larger banks are turning to such stock programs as a way to tie their employees to the companies' performance. In addition to Chase and BankAmerica, NationsBank Corp. and BankBoston Corp. have also introduced companywide stock programs over the past few months.
"It gives the employees a bigger stake in what goes on at the company," said Sanford Bernstein & Co. analyst Ronald Mandle. "They want to have a way of rewarding their employees for doing a good job and to align the interests of the shareholders and the employees."
And observers agree that more banks are likely to implement such programs in the future. "These options are lottery tickets," Mr. King said. "They cost the company nothing. Contrast that with a 3% rise in wages for thousands of employees, you're talking a lot of money."
In a letter to all employees, Chase chairman and chief executive Walter V. Shipley thanked employees for their help with the "largest and most complex merger in U.S. banking history."
And he exhorted employees to "continue your very best work so that we can indeed achieve our mission of becoming the world's premier financial services company, a goal well within our grasp."
Chase employees may exercise their first round of options when the average closing price of Chase shares over five consecutive trading days is at least $110. For the other two distributions, the exercise price will be determined at the time of the grants in 1997 and 1998.
All options will automatically be vested after 6 years even if the stock price doesn't hit the target. The entire plan expires in 10 years.
