Optical Options: Still Top Priority

Despite the sagging stock market and chilly IPO waters, optical networking professionals are still bullish on their stock options plans, judging from February’s Light Work poll on Optical Options Plans.

“Options are still very much a major part of the package,” says David McCarthy, president and founder of DWDM Recruiters LLC, a recruitment consultancy. “If an engineer is willing to give up options because he thinks he’ll do better with $5,000 in cash today, then he must not have faith in the company. And if that’s true, he’s working for the wrong startup.”

More than half of the 435 people who responded said that their company’s option plan was an important aspect of attracting them to their jobs. And 20 percent said it was the key reason they took their jobs.

Although current market conditions may not have dampened the importance of options as part of a total compensation package, workers seem to be a bit more realistic about what that money will eventually afford them. About 30 percent of respondents answered that they expected modest returns on their options. Thirty-six percent are counting on them to pay for their kids’ college tuition bills. And 26 percent are looking toward early retirement. Only 4 percent anticipate making enough money so that their children and children’s children will never have to work again. Four percent think they'll earn enough to put their money to work as venture capitalists.

When it comes to bonuses, those surveyed were split over accepting more options or putting cold hard cash in their pockets. Fifty-six percent said they preferred to receive cash over options when bonus time rolls around, leaving 44 percent who would take the chance on accumulating more options.

One thing is for sure, options are here to stay -- but are they really keeping employees loyal? More than 70 percent of the respondents said they have a three- to four-year vesting period; only 22 percent say that they will wait until they are fully vested before considering switching employers. Forty-two percent say they’d evaluate their situation when they are partially vested.

Check out this month’s new poll, Shakeout: Worried?, which is already up on Light Work.

-- Marguerite Reardon, senior editor, Light Reading, http://www.lightreading.com

optreader 12/4/2012 | 8:49:07 PM
re: Optical Options: Still Top Priority Any suggestions for the reasonable stock options offer to join a optical equipment startup? I am a software engineer w/4 years experience, the target company finished 1st round funding and in the process of 2nd one. Is 0.1% to 0.15% of total outstanding shares good enough?
twocents 12/4/2012 | 8:49:07 PM
re: Optical Options: Still Top Priority Sheer equity percentage does not mean much
without considering other factors. One of
the good formula is

Your total financial reward =
equity percentage * the future valuation of
the company * the probability of success
optreader 12/4/2012 | 8:49:04 PM
re: Optical Options: Still Top Priority Thanks for the response. The problem is, it is almost impossible to predict the valuation of a start-up and the possibility of success. The only thing that is quantifiable is outstanding shares. I would guess there is a average of percentage you can get depends on the :
1. stage of funding
2. your professional experience
3. how many people in the company
exphoton 12/4/2012 | 8:48:50 PM
re: Optical Options: Still Top Priority This is a test.
exphoton 12/4/2012 | 8:48:49 PM
re: Optical Options: Still Top Priority One of the things you can ask for is the management/founder's estimate for some of the key numbers. The biggest problem with comparing job offers is that no company gives out details related to the following: 1) Total shares outstanding. 2) Estimated dilution based on funding needs. 3) Estimated valuation based on comparables in industry. If the executive team does not divulge any of the above, be suspicious. You have a need to know.

A S/W engineer in the telecom world with experience working on real products should get at least 0.1% of the initial outstanding shares from a good company that is not trying to screw its employees.

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