PaineWebber reps just now are learning the details of a new stock option plan the firm will begin offering in January 1999.

The plan, called PaineWebber Equity Plus, is an after-tax deal that will allow PaineWebber employees to defer up to 10% of their compensation for the purchase of company stock, up to 1,000 shares in a year, with the firm providing a two-for-one option match for each share purchased. Options are exercisable after three years and expire after seven years. The voluntary plan covers most full-time employees. They must deduct at least $100 a month from paychecks under the plan.

The option plan comes as the firm also changes its defined benefit pension to a defined contribution plan. Reps say those who are under age 55 with less than 10 years of service will now be part of a self-directed retirement plan. "It was a way to appease everybody and not cost them as much money," one rep says.

At press time in early November, brokers contacted by RR say they had yet to receive all the information on either the retirement plan or the option package.

Most reps are greeting the changes enthusiastically, however: "It's a good way for all employees to participate in growth of PaineWebber stock," says one rep of the option plan.

But reps producing more than $400,000 annually had mixed feelings: "It's pretty attractive to get two options for each share you own," says one high-end rep, "but I feel like those of us who were bigger producers got screwed by not getting what we had been getting."

Under a plan that was discontinued this year, top-tier brokers automatically earned options based on length of service, production and other factors: 500 options for those in the PaceSetter category; 1,000 in the President's Club; and 2,000 in the Chairman's Club, reps say.

But Glen Gatlin, a top producer with the firm in Dallas, calls the new plan "extremely positive. [It] will be an improvement" over the old plan, he says.

With brokerage stocks on the rebound after a free fall in the third quarter, buying company stock suddenly looks lucrative again. One recruiter says brokers had been joking that their 401(k) plans had become "201(k)s," after losing, in some cases, half their value.

Bloomberg reported that between July and early October, PaineWebber stock fell more than 57% from its 52-week high of 533/8, but has rebounded in recent weeks.

"It was scary," the high-end rep says. "We're back up to 38 [in early November], from 21 less than four weeks ago."