Confused by all the brouhaha surrounding stock options? Let expert Alan Simon demystify this often-confusing investment vehicle for you.
If you're like the majority of the estimated 12 million employees in the U.S. who have stock options as a key component to their compensation packages, you have a vague notion, at best, of how options work and what they can mean to your financial well being. What's the vesting schedule for your shares and how will their strike price be set? What type of stock option grant will you receive, an ISO (incentive stock option) or an NQSO (non-qualified stock option)? What tax rules apply to your option program? Your financial future could depend on your knowing the answers to these and other questions regarding your company's stock option plan.
Featuring clear explanations of how your stock options might make you money--or not--this friendly guide fills you in on what you need to know to:
* Understand different types of stock options
* Read and find traps in your stock option agreement
* Evaluate the pros and cons of company investment vehicles
* Assess vesting schedules and tax laws
* Tap Web resources
Simon demystifies the jargon, rules, and tax consequences of stock options. He provides a realistic picture of what to expect from your options, and he helps you see past the hype to understand what your employer is really offering. Important topics covered include:
* What you need to know before accepting a compensation package that includes options
* Developing a stock option philosophy and clear-cut goals
* Knowing whether you're being treated fairly by your company
* Making sense of the language of stock options agreements
* Getting a handle on key restrictions on how you exercise your options
* Stock option valuation
* Tax rules and how they apply to different types of options
* How stock options can be affected by changes at your company
Stock Options For Dummies is the only guide you'll need to get the most out of this important investment vehicle.
Autorentext
Alan R. Simon, author of Data Warehousing For Dummies, is a manager at Deloitte Consulting. Alan has experienced every side of stock options in public and pre-IPO companies, large Fortune 500 corporations, and small consulting firms.
Inhalt
Introduction 1
Why I Wrote This Book: The Lessons of 1999 and 2000 1
Who Needs to Read This Book? 3
How to Use This Book 3
How This Book Is Organized 4
Part I: The Fundamentals of Stock Options 4
Part II: Details, Details: What You Must Know
About Your Stock Options 5
Part III: Money! 5
Part IV: Pay Up! Taxes and Stock Options 6
Part V: Changes and Special Circumstances 6
Part VI: The Part of Tens 6
Icons Used in This Book 7
Part I: The Fundmentals of Stock Options 9
Chapter 1: Stock Options: What You
Need to Know Right Off the Bat 11
Understanding Stock Option Basics 11
Knowing what stock options are 12
Knowing how stock options work 13
Exercising Your Stock Option(s) 15
Understanding the Right Nature of Your Stock Options 19
Comparing Stock Options to Actual Shares of Stock 20
Granting Stock Options: Why Do Companies Do It? 21
Hard work equals great rewards 21
Building (or trying to build) a stable workforce 22
Diverting cash from salaries to other uses 23
Comparing the Two Main Types of Stock Options 24
Chapter 2: Taking Your Chances: Getting Rich or Going Broke 27
Making Lots of Money: The Upside to Stock Options 28
When Good Options Go Bad 30
The sad story of underwater stock options 31
Is getting in early the secret? 32
Stock Options as Golden Handcuffs 34
What are golden handcuffs? 34
Conspiracy theory 35
Why stock options go underwater 37
Reading the Oxygen Meter on Your Underwater Stock Options 38
Real companies versus fad companies 39
Realizing failure isn't just a fad 40
Chapter 3: Knowing What Kind of Stock Option Situation Is Best for You 43
Assessing Your Attitude: Entrepreneur, Investor, or Working Stiff? 43
The entrepreneurial approach to stock options 44
Stock options as an investment vehicle 47
Job security and a steady paycheck but with a kicker 48
Considering Your Personal Situation 49
The Two Different Types of Employment Situations 50
High-risk, high-reward situations 50
Risk-managed situations 50
Putting It All Together 51
Determining the Best Situation for You 52
The risk-reward balance and your share of the ownership pie 52
Considering the external environment and your personal qualifications 53
Chapter 4: The Big Guys and The Big Picture 57
Recognizing the Big Guys? 57
Board members 59
Identifying the big guys and watching their moves 60
Understanding Other Big Guy Investment Vehicles 60
Restricted stock 61
Warrants 62
Convertible debt 62
Knowing How Much of Your Company the Big Guys Own 63
The earliest stages of startup 63
After the first few rounds of investment 64
After going public 65
The Fortune 500 stage 66
The Friends and Family Stock Program 67
Part II: Details, Details: What You Must Know about Your Stock Options 71
Chapter 5: Deciphering the Legal Language of Stock Option Agreements 73
Knowing What an Employee Stock Option Agreement Is 73
Figuring Out What Kind of Stock Option(s) You Have: ISO or NQSO 74
Trudging Through the Details of Your Stock Option Agreements 75
The date of the agreement 76
The number of shares 77
What kind of stock 78
The strike price 79
The vesting schedule 80
Split adjustment clause 82
Knowing When Your Option Is Exercisable 84
Exercising your stock options 84
Conditions of employment 85
Termination provisions 86
Change of control clauses 87
Blackout periods 88