"I am not happy with the offer. I want 20% more," he negotiated. "We are giving you stock options. We usually give 25,000 but I am offering you 40,000," the CEO of a startup offered.

Now, that sounds lucrative ... if you don't know the whole truth, that is.

In this case, my friend and a journalist trying to make a transition to the Dot Com world only knew too much – he dumped the offer. Increasingly, due to various factors, the 'hype' around employee stock options is fading. Suddenly, cash is king for job seekers in Dot Com startups and companies are having to cough up starry pay packages and perks. However, the memories of young 'uns becoming millionaires owning stock in startups was reality. To most, stock options are about financial compensation. If you work for a Dot Com, you might get rich. This lure of fortune is used as a recruiting and retaining tool.

Options are not stock. An employee stock option is simply a right to buy a given amount of company stock at a given price for a given period of time.

a positive perspective
Stock options can be viewed as a kind of psychic compensation. They give you a stake in the success and failure of your company. This has value even if the options are never realized. They are a testimony of commitment by the company, in which case, the financial worth of the options becomes less important.

Dot Coms have a lot to offer. They enable you to be part of creating a company, to shape your own environment and be successful. Ensuring that benefits are real and lasting is a major challenge for the management, but a lot easier than assuring an ever-rising stock price.

the growth path
The stock options offered to you go through various stages, right from the founding, seed funding (or angel funding), institutional funding (funding by strategic investors or venture capitalists), a pre-IPO valuation, the IPO (initial public offering) and post IPO trading – phew! That is a long way to dream!

If you distribute the stock of a Dot Com startup in a pie chart. The majority shareholding would be with the founders and a small percentage allocated for employees. A few other parts would belong to investors who fund the startup. As the startup moves along its growth path, its valuation appreciates.

timing is …
The best time to negotiate for stock in the company is at the time of joining. Although the risk is spread, the chances of negotiating better are at the time of joining. Companies grant stock options to their employees at the pre-IPO stage. This is also a good time to acquire options. If you plan to join a company that is publicly traded, watch the movement of the stock of the company and negotiate for a comfortable strike price.

a changed scene
The recent burnout of Dot Coms has unnerved many jobseekers looking to make the transition. Jobseekers are doing due diligence on potential employers, checking out their investors and negotiating for higher salaries and perks. People are not settling for options unless they are convinced the company is going to be one of those that make it - the difference between 'sizzle' and 'substance.' So take stock of your stock.