kpf, since top management is not eligible for the options exchange, it won't matter that the employee price is dependent on stock performance in early 2004. Individual employees do not think of such things when pursuing their daily objectives - they do not see the direct effect they have on the stock price, and they are more concerned about meeting milestones and deadlines.
Stock incentives do have a positive effect on productivity in aggregate because employees do see the effect of successful product launches on stock. Actually there is a paradoxal effect here: As stock rises, employees get positively motivated - even when they know their shares will be more expensive. This is because the trend is their friend (or so they think), and a level or declining stock price shows no hope of future benefit.
It is very rare to find an employee who is motivated to get their option price on a stock dip, even though that is the better way to make money.
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