Novell (NOVL) dirt cheap, good buy? Message Board

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Technology Stocks : Novell (NOVL) dirt cheap, good buy?

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To: nandaca who wrote (29804)	1/5/2000 4:52:00 PM
From: Paul Fiondella	Read Replies (1) of 42771

Your situation should be discussed with fellow Novell employees and the people in the company who get paid to help employees with these questions. Scott discussed this dilemma way back when we were looking at how top management took their granted options and exercised them and sold them all on the same day. I asked why, since it seemed like a lack of faith in the company, and Scott and other Novell employees said that it was because of the way the options were issued. The company treated them as employee compensation. If you got lots of granted options at $8 then you pay income tax on the gain when you exercise, say at $35. Meaning that when you convert the option and take the stock you owe the government income tax on $27 a share whether you sold the stock or kept it at that point. It is not treated as a long term capital gain but as employee compensation --- the equivalent of short term capital gain rates. And you could easily get kicked up into some very high personal tax brackets! Because of this you have to talk to Novell about whether upon exercise they will seek withholding taxes on the difference between the option cost and the share price on the day you exercise. In which case you need an accountant to figure all of the angles. It looks like you can't do much with these kinds of options. Perhaps you can find a way to avoid Novell taking the withholding tax and at least get a year's worth of interest. But you need professional advice and the benefit of other employees experience. ======== Presumeably Slitz had this one figured. ======== If you don't have these kind of options and they don't treat the difference in grant price and sale price as your employee compensation then you have many more possibilities. You can then think about calls and puts. You have to ask other Novell employees what they have done. Most definitely if there is alot of money involved it pays to get professional advice. Don't wait until the last minute.

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