As America Online Inc. and Time Warner Inc. begin to figure out how best to meld the two companies, one delicate issue will be the future of AOL's millionaire-making employee stock option program.

At AOL, stock options are part of the culture. Virtually every employee--from chief executive Steve Case to security guards and consultants--is granted options. In its September proxy statement, when AOL sought shareholder approval to update its stock option plan, the company spent two long paragraphs extolling the value of options, calling them a "key component" in maintaining the company's "culture, employee motivation, and continued success."

AOL spokeswoman Tricia Primrose said the company will continue to offer stock options to people hired before the merger is formally closed. But what happens afterward is "still something that has to be decided."

At Time Warner, stock options are awarded less liberally and mostly to executives, although in the past year the media giant has been dangling options in front of more of the rank-and-file of its online unit, New York-based Digital Media, which employs about 250 people.

Options typically allow employees to buy stock at the market price on the day the option is awarded. They reward an employee over time as the options vest--but only if the stock price increases, as has been the case with AOL.

Compensation experts say a combined AOL Time Warner may change what has perhaps been AOL's most successful way of recruiting, retaining and motivating employees, a possibility that raises questions about its ability to continue to attract and retain people from a limited pool of high-tech talent.

The stock option issue will be examined by a four-member "integration" committee, made up of two executives from each company, which met for the first time Wednesday night and is charged with coming up with a plan to restructure the merged entity.

The committee could recommend extending options to all 82,000 employees of the combined company, a move that compensation experts say would be extraordinarily expensive. They could also propose to scale down the program and use it only to recruit in-demand technology workers who are used to large stock option packages.

The problem with the latter scenario, says Michael Burniston, who heads benefits consulting firm William M. Mercer's reward consulting practice in the Northeast, is that it might cause tension between the haves and have-nots. "It puts a lot of stress on the balance of fairness," he said.

The AOL Time Warner committee could also decide to kill the program altogether, which would likely threaten its ability to compete for talent.

The issue is especially critical because the change in corporate control will trigger a provision in the current stock option plan that will accelerate when AOL employees can exercise their current options. Normally, employees must wait several years before becoming "vested" or be able to sell their shares. But now, all 12,100 current AOL employees will be able to sell all their stock, with a current market value of about $12.4 billion, one year after the deal closes. Among some AOL managers, there is a fear that employees will be less motivated and more likely to leave once they are able to cash in their shares.

And even if AOL Time Warner continues to offer stock options to all its employees, the options could be viewed as less valuable in the future. Some analysts have predicted the stock of the combined company will become more stable, but grow more slowly.

In the past few years, the success of "dot-com" companies in the bull market has redefined the rules of the job market.

Computer wonks have quit moderate-paying jobs at established companies and descended on California, Washington and other high-tech hubs to try their luck with jobs that pay in stock options--which may turn out to be worthless or to be gold mines.

More established companies, which for years have limited their stock options to only the top five or so executives, have begun to embrace the practice. A recent study of 900 companies by William M. Mercer found that 21 percent provide stock to a wide range of employees.

"If you're trying to get the right people, stock options are essential," said Rick Schultz, president of OptionWealth, a Rockville company that sells software to help employees manage their options. "Even within my own company, we have people getting offers from other startups and we have to match. Without options, no one would come. Even the janitorial staff gets options."

So far, AOL workers have made out astoundingly well. In the past year, AOL's stock has almost doubled in value. Since it began awarding stock options in 1992, the year the company went public, AOL has created several thousand paper millionaires in the area based on stock options alone.

But as AOL propels itself into the ranks of the more established media, it will face the same issues these larger companies are battling. High turnover has been the order of the day at Knight Ridder's New Media and Mercury Center, for instance, as well as at The Washington Post Co.'s unit, which don't offer option plans. Young Web programmers and content experts have left after stints of a year or two to chase stock options at places such as Yahoo, where the value of options has skyrocketed along with the stock price. Some large companies such as Kmart Corp. have even spun off their online units to help employees there cash in on the demand for such stocks.

Olaf Olafsson, vice chairman of Time Warner Digital Media, called stock options "absolutely necessary" in the technology world. "It's the nature of the beast of the businesses we are in," he said. "It's a competitive market out there." He added that "everybody knows" stock options are important but that greed shouldn't overshadow other less tangible factors.

"Money is certainly a component. We all need shelter and food. But apart from that, people want to be intellectually stimulated and they want to function within a culture that allows them to do that," he said. "Any stock you throw at people won't help if you don't have that energy, that environment of companies like ours."