Companies in Dover’s peer group that have option plans include the following food producers: High Liner Foods Incorporated, Saputo Group Inc. and Maple Leaf Foods Inc. Maple Leaf, with the largest 1999 revenues of these companies at just over 3.6 billion, has an option plan that represents potential dilution of 9.6%. High Liner, a much smaller company with 1999 revenues of just over 300 million, has a slightly higher percentage of shares reserved at 9.7%. Saputo Group’s 1999 revenues were nearly 2 billion, yet its option plan currently provides for a more moderate 6.2% dilution. One possible reason for the relatively small size of the option plan at Suputo is that its CEO, as a major shareholder, does not participate. Those who had the pleasure of spending the past proxy season considering a multitude of proposals regarding option plans will recognize any option plan representing potential dilution of less than 10% as being relatively conservative.

Although holding no stock options, Dover’s CEO share based compensation was not exactly paltry when compared with the peer group. CEO salary, bonus and value of unexercised, vested options totalled approximately $2 million at Maple Leaf, $600,000 at Saputo and $300,000 at High Liner. The stock option component of total compensation is not very significant at these three companies. None of the peer group CEOs exercised options in fiscal 1999. At the close of fiscal 1999, vested options held by the CEO at Maple Leaf were valued at nearly $700,000; High Liner’s CEO held nearly 100,000 vested options, but these were all underwater. Emanuele Saputo’s equity stake in the family firm is considered by its compensation committee to provide a sufficient performance incentive, and he does not participate in Saputo Group’s option plan.

So much for the food producers. At the other end of the spectrum, Gennum Corporation, a designer and manufacturer of specialized circuitry, is exactly the sort of company that one assumes would be at a loss to attract executives without a rich option plan. Gennum’s incentive

based compensation plan allocates cash for investment in common stock based on the company’s rate of return on equity and its sales growth. The shares that are granted do not fully vest for five years. The CEO’s total compensation was $437,345 cash and just under $400,000 were directed to a Trustee for the purchase of common shares.

A selective peer group of companies all have option plans in place that represent varying potential dilution levels. In descending order of revenues: Celestica Inc.’s plan reserves the equivalent of 11.8% of outstanding shares for option grants, ATI Technologies’ plan reserves 18.5%, and BAE Systems Canada’s plan is at 6%. Once again, the option-free company is the smallest of its group with revenues of about one-third the revenues of BAE.

The CEO of Celstica received $1,151,570 payable in US currency along with an option grant exercisable for the purchase of 270,000 common shares. This grant represented 5.2% of options granted in the year. His total option holdings were valued at just over $24 million. ATI’s CEO was granted 20,000 options to purchase common shares and exercised options to purchase 120,000 shares for total profit of $2,574,000, bringing his total compensation to just over $3 million for fiscal 1999. BAE’s CEO took home $661,788 in salary and bonus for fiscal 1999 and was also granted options to purchase 100,000 of the company’s shares. This grant represented 35.1% of stock options granted to all employees.

Compensatory comparisons are difficult, even among companies in the same sector; add in comparisons between firms with and without stock options and the waters can only be muddied. Of course, there is the usual observation that larger companies tend to more richly remunerate their CEOs than do smaller ones, regardless of economic sector. It is, of course, in industries with the highest stock price volatility that stock option compensation has the potential for truly staggering payoffs.

This survey of comparative compensation at firms within the same peer group with and without option plans is small