Business & Finance: Stock for Employees

To give executives a bigger incentive, many a company has permitted them to buy company stock below market price. Last month Chicago's Inland Steel Co., like some other corporations, set up the same stock option for its 19,000 eligible employees. It agreed to sell the stock for $42.25, which was 5% less (the maximum cut allowed Inland by the Salary Stabilization Board) than the open market price on Aug. 25. Employees were to pay for it in cash or payroll deductions. Last week Inland reported the plan had been a huge success; out of 250,000 shares offered, employees have already signed options to buy 208,000 shares with a value of $8.7 million.

The idea of cutting employees into a share of the company also looked good last week to Indiana's Magnesium Co. of America. To pay off a retroactive pay raise in its new union contract, Magnesium will distribute $100 company bonds pegged to the Bureau of Labor Statistics' price index. The bonds, which will also be sold to employees, will be revalued twice a year, in line with the cost of living. They can rise as high as $150, but cannot dip below the purchase price. Moreover, the bonds will draw 4½% interest on the adjusted values. The company feels the bonds will give employees some of the benefits of common stock without the risks.