Do stock options still matter?

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When that job offer sits waiting on the table, are stock options still an issue? With IT stocks suffering, I wonder if employers have lost some of the bargaining power that was once capable with options. If so, what are firms doing to offset the lackluster appeal of options? Are they actually boosting salaries!?

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Do they matters?

In reply to Do stock options still matter?

I am from a firm that is in Wireless technology and the firm was worth 35 Million $$ and wanted to go IPO.I had a lot of stock option. We had money problem because our sales office was spending to mutch money and didn’t sale the product. We were about to go bankrupt. A big firm from Europe bouth us….and you know what, my stock option are woth nothing. So do they matters? I don’t think so….they are a little plus but nothing else. A retirement plan or annuel bonus matter for me but stock option, I don’t feel anymore that they are a big thing in my case

Do Stock Options Still Matter

In reply to Do stock options still matter?

In the current market climate, it is still a good idea to consider Stock Options.

The reason being that Stock Options are usually offered to upper level management positions. The employee then has an incentive to perform managerial tasks which will enhance the value of the earnings of the entity. That same employee also has access to the cash flow position of the entity. Adjustments in the employee’s work performance can be made to improve the earnings so the value of the shares will increase.

So it still is a worthwhile consideration especially when a significant job offer is being presented to an individual.

I would take salary over options

In reply to Do Stock Options Still Matter

Show me the money.

Stock Options

In reply to Do stock options still matter?

The secret of the stock market is to invest in profitable companies that will preform in the long run, all that has changed is people and companies are waking up to the fact a lot of companies do not make a profit and will not do so in the near future. What value are stock options in a company that is in the red and will stay there?. If IT companies want stock options to mean something then i only have three words for them “Make A Profit”

For Young And Single Only

In reply to Do stock options still matter?

Unless you are young and single with few expenses, you should never trade salary for stock options.

If you are in a stable public company, then you will rarely get enough stock options and run up in price to receive much more than a nice bonus when you excercise the options. If you are in a pre-IPO and started at the beginning of the company, there is a chance you could strike it big, but in the vast majority of cases your stock options will turn out to be worthless.

In my younger days, I went the route of taking reduced salary for stock options. The company evanutally tanked and I never got a penny for the options. I don’t believe this hurt my salary level in the long run, and it was an interesting experience, but I could not make the same choice now due to family and mortgage expenses.

The bottom line is that unless the offered salary comfortably covers your current expenses (and projected expenses for the next 5 years), don’t even look at stock options.

I agree

In reply to For Young And Single Only

Though not with the part about being young and single. I don’t think you should EVER trade salary for stock options, no matter your age.

The key to stock options are to be with a reputable company, who has an established history of stock growthand company performance. In that case, your stock options will be more likely to be worth something in the future. They become INCENTIVE, not SALARY. This is the true value, in my opinion.

The problem with a lot of Dotcoms is that they are promising (or misleading) employees with double digit stock growth, on a company which has no business model, no revenues, no customers and no hope.

Use them for what they are worth.

I disagree

In reply to For Young And Single Only

I’m 52 and married and considering taking an early retirement from where I currently work. I’d like to go to a place that can use my experience and give me stock options in return. I don’t need the cash or the insurance or any other bennies. Give mea piece of the company in the form of stock options.

Look At an ESOP Instead

In reply to I disagree

If you are looking at a stable, publicly traded company, you are going to be far better off with an ESOP (Employee Stock Ownership Plan) than stock options.

Most ESOP plans allowing you to buy company stock at a 15% discount from the starting or closing price over a 3, 6, or 12 month period, which ever is lower. Money is usually deducted directly from your pay check. You are guaranteed at least a 15% return and you are immediately vested. The amount of money is much smaller and you don’t have to suddenly budget a large amount of cash to buy the options before they expire (you should never buy options until either you are ready to leave the company or the options are about to expire).

Unless an IPO happens, stock options rarely provide more than a nice little bonus in typically 5 years time. ESOP programs provide a guaranteed little bonus in a much shorter period of time and are much more beneficial to employees at all levels.

I agree

In reply to I disagree

I have watched in disbelief as investors and dot com promoters have concurred that being first to market was the most important thing to the exclusion of all other factors. What about revenue, customers, and providing a product that is really useful AND wanted by a meaningfully large number of potential users that are willing to stay glued to their computers for the requisite 8 hours a day to ensure they find your web site?

The truth is that most dot coms are companies with technology in search of a market. High technology alone does not ensure success. High tech solutions must be more convenient, simpler, and more accurate. Why? Because high technology?s high price tag must be offset by unambiguous financial benefits that outweighthe costs of implementation.

Willfully blind dot com management teams that insist that pay dirt is just another shovel away in spite of the evidence to the contrary deceive not only themselves but their employees and investors as well. Offering stock options as a surrogate for cash when one has no assurance that the underlying stock will grow in value is unconscionable because the offer denies present and future employees their real worth. It is simply exploitation.

In the long run such a practice is self-defeating. Those who agree to work for such compensation plans do so out of either trust or speculation. If either type of employee senses either betrayal or business failure, they leave usually at a time when continuity of knowledge and talent is most needed. In the end, the company is the biggest loser of all.

The lesson is simple. Management should not offer stock options as a salary replacement unless it KNOWS that (1) the underlying stock has real value and (2) the value of the stock is going to rise. Without this certainty options are worthless, and it cheapens the entire business.

I’d rather invest my own money

In reply to Do stock options still matter?

The annoying thing about stock options is that you more often then not have to assume that the company will make profits and will be well viewed by investors.
I’ve never asked for stock options even when offered. If the value of the stock was defined by my performance or lack thereof, then I could envision having them. Since I have no control over the value of the said options, I think I would wrather take the money and invest it where I see fit.

This way, if I make money from my investments, it’s my own doing…

Sure, there is a chance that one may make loads of money with stock options… But really… how often does it happen?

Balance

In reply to Do stock options still matter?

The short answer to the question “Do stock options still matter” is yes, they do. The longer answer addresses how they matter.

We’re seeing more engineers coming in and asking serious questions about the financial position of the company than we’ve experienced before. Based upon the answers they get, they’re either trading options for salary or not — it’s a personal decision about balance for which a blanket “never do this” or “always do that” rule cannot apply.

As with any investment (and a job can be one of your biggest investments), carefully weighing the facts is important. The investor pool for jobs has gotten smarter.

What works?

In reply to Balance

As managers and CIOs, how do you recruit and retain talented staff now that they have become financially savvy? What do you do when they feel stock options don’t matter and you don’t have big bucks to throw at them?

Rose Booth
TechRepublic

What works?

In reply to What works?

Rose: Fiancial savvy being what it is among techs, a company has to rely on showing the job seeker about what opportunities the company is offering. The days of throwing money to lure techs are mostly over. Show them your company’s worth in non-fiscal terms such as career opportunities, positions becoming available. The money follows promotions. Money hungry techs are just that — money chasers. You need goal and project oriented techs. Those are the ones that build you a good loyal customer base.

What works is honesty

In reply to What works?

To think that employees work because they are motivated by money reflects an incomplete understanding of human nature. Employees do have a life that goes beyond the four walls of their employer’s offices. Most employers express no interest in thatother portion of their employees’ lives, but that is precisely where they should direct more of their attention.

Employees work because they must support children, spouses, parents, and siblings. While some work out of greed, few do. Recruiting and keeping employees means treating them as if they have both a brain and a heart. When an employee comes to me requesting a few hours off to take care of a personal matter, my frequent response is to take the day off.

Let’s face it. Executives don’t make a company succeed. Numerically, there are too few of them for that to be possible. It is the average employee that makes a company work. The persons typing on a keyboard, stapling papers, lifting cartons, or pushing a broom make a company work. If they don’t feel commitment from their employer, they won’t be inclined to give it back.

Attracting someone to a position does not begin when the candidate is sitting in front of the interviewer. It begins with the very first contact from the company and proceeds through his first step through the door at the company’s office. Does he see happy people who are already employees of the company doing their daily work? Grim faces, sharp words, sloppy dress, disrespectful conduct, and undisguised laziness are the barbed wire around the HR office that sends clear messages to prospective employees to keep out.

It is possible to fake it for a while, but ultimately what is real always comes to the surface. Unless companies can find ways to pay and befriend their employees, money will continue to be the only language spoken during the hiring process.

A Good Business Plan

In reply to What works?

Being unable to afford to pay the salaries for required professionals should only be a temporary condition seen at a start up. If you don’t have a buisness plan that shows generating enough revenue to pay competitive salaries with about 2 years andmaking the stock options worth 2 – 5 times the reduced salary in about 5 years, you probably don’t have a plan to make your business succeed.

As Bob Artner notes in his column on employee retention, you will limit the number of candidates when you are in this position. Many candidates will be unwilling to accept the risks of deferred compensation and there is nothing you can do to change that.

The bottom line is that if you are asking candidates to accept a significantly lower salary in the short term, you need to show them a plan that puts them financially ahead within about 5 years.

Recruiting with Big Bucks

In reply to What works?

First you have to dismiss the notion of big bucks as a way to recruit and retain. Even if you do have the big bucks to offer, that’s not a winning strategy — someone is always willing to offer more; if not now, then within a few months.

So what’s left to offer? Consider what makes employees leave their jobs. I don’t think I’ve ever woken up in the morning and suddenly spontaneously realized “Doggonit, I’m worth $10K more”, but I have gotten up after a bad night’s sleep and said “My boss is acting like a jerk,” or “I really have a bad feeling about our company’s future.”

Dissatisfaction with salary is affected more by external factors, dissatisfaction with a job comes from internal factors. It’s easier to manage the latter than the former.

So what do you do?

1. Recruit employees who are interested in contributing to your company’s success.

2. Let them contribute! You hire them for their skill and knowledge — let them apply those attributes.

3. Don’t just be a boss, be a partner. Listen to your employees when they tell you what would make them more efficient, productive, or happier at work.

4. Cultivate and maintain an honest relationship with your employees. If you lose their trust, you lose it all.Alec Kercs?
SKOLAR, Inc.

Recruiting with Big Bucks

In reply to What works?

First you have to dismiss the notion of big bucks as a way to recruit and retain. Even if you do have the big bucks to offer, that’s not a winning strategy — someone is always willing to offer more; if not now, then within a few months.

So what’s left to offer? Consider what makes employees leave their jobs. I don’t think I’ve ever woken up in the morning and suddenly spontaneously realized “Doggonit, I’m worth $10K more”, but I have gotten up after a bad night’s sleep and said “My boss is acting like a jerk,” or “I really have a bad feeling about our company’s future.”

Dissatisfaction with salary is affected more by external factors, dissatisfaction with a job comes from internal factors. It’s easier to manage the latter than the former.

So what do you do?

1. Recruit employees who are interested in contributing to your company’s success.

2. Let them contribute! You hire them for their skill and knowledge — let them apply those attributes.

3. Don’t just be a boss, be a partner. Listen to your employees when they tell you what would make them more efficient, productive, or happier at work.

4. Cultivate and maintain an honest relationship with your employees. If you lose their trust, you lose it all.Alec Kercs?
SKOLAR, Inc.

Do stock options still matter?

In reply to Do stock options still matter?

Yes. What matters most is the IT manager’s ability to be ultra selective about whom is brought on-board. When I see an interviewee extremely concerned about stock options, I get worried. On the other hand when the interviewee is asking me about the available career path within my company, he/she gets my attention. These type of people go for the trophy (job progression)knowing full well the money/salary/bonus/options will follow. Everyone knows stock options are just that — options. The best techs I have hired are those who never asked about STOCK OPTIONS. They wanted a career not a jumping board. In the several years past, I have been blessed with these people and the couple of ‘young talents’ were actually flashes in the pan. Two calledback after having gone to where the higher options were and I have gently said “No, we do not re-hire ex-employees”. Why you ask? If the stock options begin to rise where oh where will my talented young tech go!

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