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To: jim_p who wrote (82442)	12/22/2000 1:40:43 PM
From: energyplay	Read Replies (1) \| Respond to of 95453

There are different types of options a compnay can grant- qualified and incentive. One has the tax due when exerecised, the other when sold. Execs get the ones which have tax due on exercise. The vast majority of people get the other kind, which has tax due when they sell. Many execs will have 'collars' on their stock (sell a call and buy a put) or will manage their tax liability.

To: jim_p who wrote (82442)	12/22/2000 3:26:47 PM
From: edward miller	Respond to of 95453

Jim, It could be more complicated, but I agree in principal. The company should explain the consequences long before they go public. The right way to handle this is as follows, as I have done: 1) You are granted options. 2) Check to see if you can do an early exercise. If you can, then exercise immediately. That way you get to buy the stock at the grant price. Your taxable income is the difference between the grant price and the market price, which in this case is zero. I did not do that, but I did come close. When I was briefed on the consequences I did exercise months later when the market price (still pre-IPO) was only 1/8 over my exercise price. I will owe only 1/8 per share this year, which is not a big deal. 3) When the company goes public (I hope) then as long as I wait until two years after my grant AND one year after my exercise date, then I am treated as any other long term investor. Yippee !!!!!! Those are basically the instructions that I got from an investment firm brought in by the company. A good company will do that for the people that make the company, and they are the employees who do the work to turn the ideas into the real products that enable a new company to succeed. If a company doesn't do that for its people, they aren't a good management team. Therefore this may not be as big a problem as the author implies.