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Terry-
These Incentive Stock Options are commonly given to Engineers at
software companies, so it's not only the executives that get them
(though they will get more).
I'm a software engineer, and I've never worked at a software company
that DIDN'T give them. Contrary to the myth perpetrated by the
financial community, engineers are also _very_ interested in profiting
financially for their work. They obviously do enjoy the pleasure
associated with solving a tough engineering challenge, etc., but
that's not the only reason that they work so hard. Many become
disgruntled when others make big bucks off of their invention(s). Why
should a salesman get more commission for selling 1 copy of their
software than the engineer who wrote it would get in a year's worth of
bonuses? This happened to me, and I left that company because of it.
How do you think Microsoft hires away so many good engineers? Their
pay _STINKS_ when compared to the rest of the industry. It is the ISO
plan that gets so many good engineers in the door. Hence the large
number of Microsoft Millionaires.
Steve
BTW, my company's ISO's expire in 10 years.
-----Original Message-----
From: TQuinn211@xxxxxxx [SMTP:TQuinn211@xxxxxxx]
Sent: Sunday, November 16, 1997 5:26 PM
To: @digitalexp.com; realtraders@xxxxxxxxxxxxxx
Subject: Re: May I ask a stupid question?
Dean,
In regards to your stock option question.
Options that trade on the exchange are very different from the ones
granted
to senior executives at large corporations.
These type of options allow the holder to purchase stock at a
predetermined
price and are typically allowed to remain in effect for five to seven
years
before they expire.
There is usually a holding period of one to two years before the
option can
be exercised.
Thus, as an example, having the opportunity to buy 2000 shares of
Compaq or
Dell Computer at a market price of 3 or four years ago , and being
allowed to
do that over the last 5 years will quickly turn one into a
millionaire.
By the way, when the option is granted, the "strike price" is
typically 15%
below the current market value, so a profit is typically "built" into
the
option when granted.
In addition, Brokerage firms have special programs to provide these
executives the opportunity to "exercise" the options without
putting up
any cash.
As they say in the military, R.H.I.P.
That is also why they don't need to try and trade their way to riches
like us
ordinary folks.
All the best
:)
Terry Quinn
P.S.: By the way, remember, there are only stupid answers, not
stupid
questions.
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