Stock Options Still Uncommon at Community Banks

Corporate America may be clamoring for stock options, but such perks are still a rarity for the typical community bank.

Since most community banks are controlled by small groups of shareholders or perhaps a single family or individual, stock options and employee stock option plans - ESOPs - are not usually a viable choice.

And even for those that can offer these perks, the school of thought these days is that the programs are not as beneficial as a cash bonus to influence worker performance, according to Mike Higgins, a former banker and president of Higgins & Associates, a Lincoln, Neb., compensation consulting firm.

But the folks at Glacier Bancorp, Kalispell, Mont., beg to differ. Glacier adopted a stock option plan when the company went public in 1984, said James Strosahl, chief financial officer for the $733 million bank company. Its 298 employees - everyone from an executive vice president to a teller - were awarded stock options.

Since then, the bank's annual return has averaged 29%. That is good news for shareholders and, of course, employees, who own about 30% of the bank's 8.6 million outstanding shares.

"We think owners make better decisions than employees," Mr. Strosahl says. "It's something that is an incentive for people to perform at a higher level."

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