Pay Me in Stock Options: Manage the Options You Have, Win the Options You Want

Pay Me in Stock Options......Page 1
Contents......Page 6
Preface......Page 12
Acknowledgments......Page 16
PART ONE—THE RISE OF STOCK OPTIONS......Page 18
We Have Seen the Future, and It Is Stock Options......Page 20
Lonnie Poole, Waste Industries......Page 27
Craig Barrett and Andrew Grove, Intel......Page 29
Howard Schultz, Starbucks Coffee Company......Page 31
John T. Chambers, Cisco Systems......Page 33
The Next Generation: Eric Kuhn, VarsityBooks.com......Page 35
PART TWO—STOCK OPTIONS IN 10 EASY LESSONS......Page 36
What Is a Stock Option?......Page 38
Example from Real Life: Mellon Financial Corporation......Page 39
Different Types of Options......Page 40
How Was the $20 Market Price Determined?......Page 41
What Is Stock, Anyway?......Page 42
What Is Your Company’s Stock Worth?......Page 43
Common and Preferred Stock......Page 44
Stock Options and Your Company......Page 45
Dilution......Page 46
Key Points......Page 47
Example from Real Life: Tim Byland......Page 49
What Are Nonqualified Stock Options (NSOs)?......Page 50
What Are Incentive Stock Options (ISOs)?......Page 52
NSOs versus ISOs......Page 54
The Super Stock Option......Page 56
Special Tax Strategies......Page 57
Key Points......Page 62
Lesson 3: Vesting, Expiration, and Valuation......Page 64
Types of Vesting......Page 66
Expiration......Page 68
Section 83(b)......Page 70
Valuing Stock Options......Page 72
Key Points......Page 75
Lesson 4: Exercising Your Options......Page 76
Focus on Performance......Page 78
Ways to Exercise......Page 79
Example from Real Life: Mellon Bank Corporation......Page 86
A Forms Checklist......Page 89
Key Points......Page 93
Lesson 5: What Should You Do with the Proceeds?......Page 94
The Plan......Page 95
An Exercise Strategy......Page 98
Financial Planning for the Top Echelon......Page 101
Stock Options and Financial Independence......Page 121
Key Points......Page 126
Lesson 6: A Short Course in Asset Allocation......Page 127
Wall Street’s Favorite Statistic: 93.6 Percent......Page 128
The Value of Diversification......Page 129
The Temptation of Concentration......Page 131
Which Asset Allocation Is Right for You?......Page 132
Where Does Company Stock Fit In?......Page 136
Stocks or Mutual Funds?......Page 141
Key Points......Page 144
Lesson 7: The Risks of Options......Page 145
Risks Faced by Employees......Page 146
Risks Faced by Companies......Page 158
Key Points......Page 160
Lesson 8: Options Overseas......Page 162
Europe......Page 163
Japan......Page 165
Stock Appreciation Rights (SARs)......Page 166
Key Points......Page 167
Employee Stock Ownership Plans (ESOPs)......Page 168
Section 423 Plans......Page 169
Restricted Stock......Page 170
401(k) Plans......Page 171
Key Points......Page 173
Mistake 1: Not Knowing What You Own......Page 174
Mistake 2: Cashing in Your Options Too Soon......Page 175
Mistake 4: Failing to Take Blackout and Lockup Periods into Account......Page 176
Mistake 5: Failing to Account for Taxes in Valuing Your Options......Page 177
Mistake 6: Forgetting about the Alternative Minimum Tax (AMT)......Page 178
Mistake 7: Accepting Stock Options in Place of a Salary......Page 179
Mistake 8: Failing to Learn What Happens if You Leave the Company......Page 180
Mistake 10: Counting Your Options before They Hatch......Page 181
Key Points......Page 182
How to Negotiate for Stock Options......Page 184
Where Does This Leave You?......Page 185
An Example from the Old Economy......Page 187
If You Already Have Options......Page 188
Value of Options......Page 190
A Slice of Life in the Executive Suite......Page 193
What if You’re a Freelancer?......Page 195
Case Histories from Real Life......Page 196
Key Points......Page 200
Stock Option Basics......Page 202
What to Do with the Proceeds......Page 213
Basic Financial Questions......Page 216
Your Personal Finances......Page 221
Risk Tolerance Questionnaire......Page 226
Selected Stock Option–Related Web Sites......Page 236
Notes......Page 238
Glossary......Page 242
Index......Page 264