STOCK OPTIONS
The Nasdaq's jitters have revealed employee stock options to be a double-edged sword, yet many of the 7 million Americans who have them can't even tell the tip from the handle. OptionWealth.com, which launched last September, aims to help option holders slice through restrictions and tax implications and turn their potential wealth into the real thing.
OptionWealth works a lot like Quicken. You tell it about your option plan, tax bracket, and investment portfolio, and it tells you when to exercise your options, how long to hold the shares, and when to sell. The Tracker feature calculates your options' present and future values based on live stock quotes, and the Alert function sends you email notifications of vesting dates. The most powerful feature, the Optimizer, lets you run what-if scenarios to minimize taxes and maximize profit within the limits of your risk tolerance. For neophytes, there's Options 101; advanced tutorials cover tax strategies and estate planning.
CEO Rick Schultz, a former financial planner, spent three years tuning the site's algorithms for his own clients. "There are huge decision trees involved," he says. For instance, many options rookies buy shares immediately upon vesting, when they'd be better off investing elsewhere until the last moment of the option period. Others sell their stock soon after buying it, though they'd dodge short-term capital gains tax by waiting a year.
In fact, enough employees are so baffled that 11 percent of those who own options worth more than their vesting price simply let them expire, according to research conducted by Marci Rossell, chief economist with OppenheimerFunds.
OptionWealth charges $199 per year for a basic subscription and $299 for a premium account with more features. A growing number of employers, including Cisco, provide site subscriptions as a benefit. So far, the only competitor is Mystockoptions.com, a free site with a richer selection of how-to articles, but less analytic firepower.
Employees may wonder whether equity is an adequate substitute for salary, but with dotcoms increasingly strapped for cash, stock options are finding their way into more and more compensation packages. The only real option is learning how to make them pay.
- Kourosh Karimkhany (kouroshk@yahoo.com)
OptionWealth: www.optionwealth.com.
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