LUCRATIVE STOCK OPTIONS SPARK LAWSUITS

NEW YORK -- The job offer to executive Todd Kenner came with aseductive pitch: Join us and we'll make you a millionaire.

That offer was premised on a compensation package laden withpotentially lucrative stock options. But when Kenner and two otherexecutives were fired from their jobs at Internet startup iVillagewithout being able to cash in those options, they went to court.

"These folks believed what they had been told that these optionswere as good as money in the bank," said Paul Yetter, a Houstonattorney who represented the trio in lawsuits filed last yearagainst iVillage, a Web site catering to women.

Those lawsuits and a growing number of others like them point tothe downside of the decade-long boom in stock-option plans that haveallowed as many as 10 million Americans to share their employers'wealth.

But with many workers now counting on such programs to securepersonal fortunes, some have decided options are worth fighting for.They're pursuing claims to their options in court when relationshipswith employers turn sour.

Such suits are likely to multiply, lawyers and compensationexperts say, because so many people now have stock options that insome cases are potentially worth millions of dollars.

Those dollar amounts "attract lawyers like ourselves to litigatebecause there's more at stake," said Alan Exelrod, the attorney fora former Oracle Inc. executive recently awarded $2.7 million in awrongful termination case. Of that award, $2 million was based onthe potential value of her options.

Most of the recent attention on stock options has centered onInternet startup employees who became instant millionaires whentheir companies went public and their shares soared in value.

Such success stories have made options the currency for NewEconomy companies and their workers, who often are willing to settlefor lower pay in exchange for a piece of the company.

Options give workers the right to buy their employer's shares ata set price and time once they have become vested, or stayed withthe company for a specified period.

Employers both fledgling technology companies and long-established public firms have embraced such programs as tools forrecruiting workers and holding on to them, at least until they reachtheir vesting date, said Corey Rosen, director of the NationalCenter for Employee Ownership.

A decade ago, 1 million U.S. workers were eligible for options;today, it is between 7 million and 10 million, the NCEO estimates.

"There are a lot of people out there who are gambling on theiroptions," said Kaye Thomas, author of "Consider Your Options," aguide on the subject. "They're gambling every time they take a newjob on what the prospects of that company are going to be."

The democratization of options and a rapid runup in stock priceshave given many people a chance at a windfall, although workersusually lose their eligibility for options if they are fired orleave a firm. But now some companies standing between former workersand stock options are finding they do so at their own risk.

A pair of programmers sued former employer DoubleClick in NewYork last year, seeking $6.3 million in damages to recoup optionsthey lost when they were fired by the Internet ad company.

Another programmer sued electronic data system company InternetCommerce Corp. in August, claiming that after he left for anotherjob, the company denied him options worth as much as $2 million bypurposely withholding information that would have allowed him tocash in.

And a group of employees sued Qualcomm Inc., alleging thewireless phone company deprived them of millions of dollars inoptions when it sold their business unit to Ericsson last year.

Yetter, who is bound by a confidentiality agreement not todiscuss details of the iVillage dispute or subsequent settlement,said he has fielded calls from former workers at other companiesconsidering options-related claims.

For the most part, though, such lawsuits are only an avenue forhigh-ranking executives with options worth enough to justify thecosts of a lengthy court battle, attorneys say. The exception may becases such as the Qualcomm lawsuit, when there are enough employeesto justify a class action.

Most of the companies named in the aforementioned suits eitherdeclined to comment or did not return calls seeking comment. Aspokeswoman for Oracle rejected all claims made in the lawsuit andsaid the company intends to appeal and vigorously defend itsinterests.

But an executive at credit reporting agency Equifax Inc., whichoffers options to employees throughout its ranks, said he is notworried about an increased threat of lawsuits.

"An employee can sue. We're a very litigious society and there'snot much we can do if they want to pursue that avenue," said EarlCrew, vice president of compensation at Equifax.

Crew said the company has revised its options agreements over theyears, trying to make provisions clearer and easier to understand.The company has not faced a suit revolving around options, he said.

It's not clear yet just how courts will treat the subject ofstock options.

"It's kind of uncharted water," said Michael McCann, whorepresented a former executive at Johnson Controls Inc. in awrongful termination suit that demanded compensation for stockoptions he would've earned had he spent the rest of his career withthe company.