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Do stock options still matter?

By John Connell ·
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?

by [spyder] In reply to Do stock options still ma ...

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

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Do Stock Options Still Matter

by veetz In reply to Do stock options still ma ...

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.

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I would take salary over options

by Charger Media In reply to Do Stock Options Still Ma ...

Show me the money.

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Stock Options

by grambower In reply to Do stock options still ma ...

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"

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For Young And Single Only

by Wayne M. In reply to Do stock options still ma ...

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.

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I agree

by RDendtler 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.

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I disagree

by Moki 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.

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Look At an ESOP Instead

by Wayne M. 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.

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I agree

by Robert DeFazio 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.

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I'd rather invest my own money

by msamson In reply to Do stock options still ma ...

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?

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