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I warned you Masa.

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Huggy wrote in message <36b9d220.240469@news.sprint.ca>...
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>http://cnnfn.com/quickenonfn/life/9901/26/q_stockoptions/
>http://cnnfn.com/quickenonfn/life/9901/26/q_stockoptions/
>http://cnnfn.com/quickenonfn/life/9901/26/q_stockoptions/
>
> NEW YORK (CNNfn) - He figured he could live pretty comfortably as an
>editor at a well-known Internet company with a $50,000-something
>salary.
> But he never realized that stock options valued at hundreds of
>thousands of dollars would change his life forever.
> "Now I'm dreaming about where I might retire, and what things I might
>want to do," says "Paul," 40, who didn't want to be identified.
> A stock option plan is the brass ring of the 1990s workplace. Once a
>perk reserved for top executives, stock options have made millionaires
>out of mid-level employees at Dell Computer (DELL), Microsoft (MSFT)
>and dozens of other companies.
> More recently, options at Web portal Excite (XCIT) soared to $1.04
>billion in value, or an average of roughly $1.49 million per employee,
>after cable Internet provider @Home (ATHM) announced a $6.7 billion
>merger, according to the Executive Compensation Advisory Services in
>Springfield, Va.
> But stock options aren't something you should chase blindly when
>you're looking for a job, career counselors and market analysts said.
>As with other benefits, you need to weigh the variables carefully.
> "The Excite situation is terrific, but it's ridiculous if you assume
>that every time someone dangles stock options like a carrot you're
>going to win," said Paul Bernard, a career consultant and principal at
>Paul Bernard & Co. in New York. "When you're tying your future to the
>company as well as the stock market, you're adding a whole level of
>the unknown."
>
>More millionaires?
>
> Stock options have transformed Corporate America since they started
>growing in popularity about 10 years ago, said Bob Gore, a consultant
>on workplace issues and a principal at Towers Perrin in Boston.
> High-tech companies and start-ups with limited cash typically use
>them in lieu of higher salaries, Gore said. In some cases, a company
>that doesn't have a retirement plan will offer options instead, he
>said.
> "I've got one client where about a third of the employees, about
>1,000 people, are millionaires because of stock options," Gore said.
>He wouldn't identify the company.
> Likewise, a number of established businesses in the Fortune 1000 list
>of companies offer options to all of their employees, said Jim Klein,
>tax partner at Deloitte & Touche in New York, who has tracked the
>issue for years.
> While nobody keeps statistics, Klein estimated that about 20 percent
>of the Fortune 1000 have some type of options plan. Out of those
>companies, perhaps 20 percent are broad-based.
> "It's an investment where you don't have to risk any of your own
>capital," Klein said.
> In the case of Excite, the company has 10.96 million stock options at
>an aggregate price of $20.49 per share, said Carol Bowie, director of
>research at Executive Compensation Advisory Services. (The numbers are
>on file with the Securities and Exchange Commission).
> With a bid price from @Home of $115.70 per share, each Excite option
>is worth $95.21, for a total of $1.04 billion, Bowie said. That's an
>average of $1.49 million for each of the roughly 700 employees. Of
>course, not everyone has the same number of options.
> Even without the merger, employees would get an average of $932,607
>if they exercised those options based on a stock price of $80, Bowie
>said.
> "For these high-tech start-ups, there's astounding value that these
>stock options are adding," Bowie said.
> At Dell Computer, employees are "amused" by the familiar phrase
>'Dellionaires," but the company has found stock options an important
>way to attract top talent in a highly competitive environment, said
>spokesman T.R. Reid.
> "When it comes to recruiting and retaining the type of people this
>company needs, stock options aren't the only important compensation
>tool, but they are an important one," Reid said.
> Other companies that have options plans are Merck (MRK), DuPont Co.
>(DD), Starbucks (SBUX), and retailers like Wal-Mart (WMT), company
>spokesmen said.
> "Stock options have played a major role in the United States in
>helping the economy as a whole, but they've also created thousands of
>millionaires," said Ira Kay, practice director of executive
>compensation at Watson Wyatt in New York. "Stock options have been as
>successful as the stock market."
>
>How it works
>
> With stock options, the company gives you the right to buy a set
>number of shares in the future at a certain price.
> For example, you might get an option for 10,000 shares at a price of
>$25 a share that you can "exercise" after three years regardless of
>the stock price. So if the stock rises to $150 a share, you still pay
>$25 an issue. Normally, the plans "expire" after 10 years.
> In other plans, you get to exercise your right when the stock
>increases by 50 percent in value, he said.
> In a non-qualified plan, you pay taxes on the capital gains when you
>exercise your option, Klein said. But in an incentive stock option
>plan, called an ISO, which is limited to shares valued at $100,000,
>you can exercise the option and you don't have to pay taxes on the
>capital gains until you sell them.
> Compensation consultants have complicated formulas to figure out how
>many stock options you'll get, Klein said. For example, if $100,000 is
>the normal salary for your position, the company might offer you
>$60,000 in salary and $40,000 worth of stock options.
>
>Be careful
>
> Stock options aren't always a home run, however. So you need to push
>for a salary that you can live on whether or not the company scores a
>success on Wall Street, Bernard said.
> "I've heard of people who've bought apartments in New York they can't
>afford, or who've stopped putting money into their kids' college
>funds, because of stock options," Bernard said.
> And with private companies that plan to go public, you really don't
>know what will happen once the stock starts trading. While analysts
>can estimate the price, any number of recent Internet IPOs show that
>the stock can also skyrocket 600 percent. On the other hand, depending
>on what's happening with the market, the offering can fail miserably.
> One of Bernard's clients thought he'd make millions when he took a
>job with stock options at a hot Internet start-up last year. But his
>dreams died when the public offering fizzled -- along with all of his
>family's savings.
> If you're negotiating a new job and you think the company carries too
>much risk, you might propose a percentage stake in the company in
>addition to stock options, Bernard said.
> "The problem is sometimes people sell their souls with a low base
>salary thinking they're going to get $1.49 million like Excite," said
>Bernard, "Sometimes people will give up too much in search for that
>Holy Grail."
> -- by staff writer Martine Costello
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