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Some employees hit it big in stock options
March 11, 1997
Web posted at: 10:51 p.m. EST (0351 GMT)From Correspondent Greg Lefevre
SAN MATEO, California (CNN) -- Meet Heather Beach, one-time office manager on her way to becoming a stock option millionaire in Silicon Valley.
The employee of Siebel Systems is among thousands who are reaping the rewards of the high-tech industry's equivalent of the fairy tale's magic beans: stock options.
Beach was in at the ground floor with Siebel. "How many people get the opportunity to work for a company (where) there were five people there before you joined?" she asked rhetorically. "How many people get the opportunity to live in the start-up company?"
Stock option plans offer employees shares of stock instead of some or all of their pay. In the early days, Siebel Systems offered a share of stock per dollar of salary forfeited. It now trades around $20 a share.
Asked about her stock stash, Beach said, "I haven't counted them all. I don't know."
Siebel Systems stock options haven't changed Pat House's life. "I live in the same house. I drive the same car."
Young companies save huge amounts of money by offering stock, building loyalty in the process.
"Our objective was to get to market quickly and to leave ourselves in a position where we were the people running the company, and we hadn't given away a lot of the company to other investors," House, an executive vice president, said.
Employees at Metalithic Systems turn out hard-rock software in trade for a piece of the rock.
"It allows us to keep and maintain our most valued employees, and to give them incentive that doesn't necessarily come out of our cash flow," said Metalithic Systems' Daryl Eigen.
Some people are willing to cut out a quarter to half of their salary for stock, and are even seeking such opportunities.
"A lot of applicants are looking to own a part of the company they're working for," said Roger King of CEO Tech Search.
"These days no one can really afford to retire, or even buy a house in northern California, so the stock is pretty appealing," said Chris Perkins of Metalithic Systems.
But the rewards are not without risks. Fewer than 1 percent of startup companies actually make it big.
In the volatile technology industry, experts say companies dominated by employee owners tend to be more stable. The employees are focused on the company's long-term success -- because it's also their own.
Related sites:
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- Siebel Systems Inc. Home Page
- Welcome to Metalithic Systems Inc.
- IPO OnLine/InvestorsEdge Premium Service
- US Securities and Exchange Commission
- IPO Monitor
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