Option conversion increasingly common.

• Position: Business Briefs - Brief Article

Siebel Systems Inc.'s program for dealing with its underwater stock options, announced earlier this fall, is part of an increasingly common trend, experts say. The San Mateo, Calif., enterprise software maker elected not to do a full-scale repricing or to issue new options, but offered employees either cash or new common shares in exchange for many of their old options.

According to a Securities and Exchange Commission filing, 3,400 employees agreed to trade 28 million options valued at $40 or more for $1.85 in cash, or the equivalent amount of Siebel stock. Another 1,390 workers traded 2.4 million options for cash, and 2,030 more traded 25.6 million options for 5.3 million shares of stock -- a reverse split. At the time of the filing, Siebel's shares were trading at less than $6 a share.

The program wasn't totally elective: Siebel gave only cash to employees who would receive less than $5,000, and only stock to those getting more.

Diane Doubleday, a San Francisco-based consultant for Mercer Human Resources Consulting, views the program as being in keeping with tools organizations are using to handle...