Aren't many engineers contractors anyway? I know in software it's more and more that way…

I always thought of options as more of an incentive to account for the risk in a new company, more so than a standard reward for working at a big one.. I don't foresee many front-line workers getting much of the pie, this seems like more of an executive thing once the company is established..

We hire a lot of I.T. contractors to get the grunt work done. But for more things like design/prototypes/first gen stuff, we typically use internal hires. Outsourcing is no longer as cost effective. It's like $50/hr for some folks some places like Bangalore for contracting, plus you have to deal with the time differential,language issue,etc. Also, contracting work quality tends to lag in house (especially overseas). It's just cheaper to open an office there.  I.T. typically is easier to outsource/contract. Other things like high tech r&d has challenges. You can't exactly outsource designing the next broadband protocol. 

The lesson I learned is if you're planning to stay in tech, don't stay in areas considered "engineering labor".