Bend startup signs Bank of the Cascades Published: September 11, 2003 By Kevin Max The Bulletin Bend startup company Net Worth Strategies recently signed Bank of the Cascades as its first major client for its option training services. Net Worth Strategies is a company that designs financial-planning software that lays bare the risk and the Bill Briggs, right, president and CEO of Net rewards behind company stock Worth Strategies, signed a deal with Bank of options. Its flagship product is the Cascades' president Patti Moss to educate StockOpter, which models employees on the intricacies of stock options. different scenarios for option The deal marks the first major client for the holders. Bend-based startup's option consulting business. In the complexity of options Pete Erickson / The Bulletin lies the opportunity for Bill Briggs, Net Worth's CEO. "As long as employees don't understand the power of the leverage behind options, they are wasted as incentives," he said. Net Worth Strategies' products are designed to educate employees on the risk and reward that lie ahead. The company started with StockOpter, then added Insight for further option monitoring and then a host of services and training. In its new relationship with Bank of the Cascades, Net Worth Strategies helps bank employees understand the risk and reward calculus behind their options and assesses the personal financial profiles of 73 bank employees. Briggs customized and predelivered a report for each of the employees based on their personal option allocations. At the ensuing seminar, he explained the ramifications of their outcomes. "It certainly broadened the knowledge of our employees with regard to options," said Peggy Biss, executive vice president of human resources at Bank of the Cascades. "We had done one educational seminar, but as far as applying the Black-Scholes model, we couldn't do it." The Black-Scholes model helps employees see the future value of options that are "under water," or currently worthless. Biss said the bank will retain Net Worth Strategies for ongoing individual option monitoring and further education. "It's the best educational tool I've seen for this purpose," she said. Net Worth Strategies' wheels are just getting moving. The company is targeting the banking industry, which has done well over the past few years, biotech and profitable tech companies. Briggs acknowledges that the company would have been rolling along nicely if the option environment were as strong as it was before the tech bubble burst in 2000. In the embers of fallen tech companies that burned so brightly only a few years ago, the climate has cooled for company options. Through the 1990s, options were a sumptuous carrot companies used to recruit and retain employees. But the scenes of ruined retirements from Enron options and new pending accounting rules have stolen their luster. Indeed, Microsoft, once a den of alchemy for its employees with options, recently cast them aside in favor of restricted stock, signaling that the golden years of options could be running out. Briggs said Microsoft's practice though has not been widespread. "Companies still need options to keep their top talent there," he noted. Other tech companies such as computer giant Apple Computer and software-maker Adobe Systems, have chosen to do the opposite of Microsoft by repricing employees' options closer to the stock's trading price. For example, if Apple's employees had options priced at $40 and its shares are now trading at $22, employees might trade a cup of coffee for their options $18 under water. To spark its talent, though, Apple could lower the option strike price to $30, increasing the likelihood those options will someday be worth something. With a steady annual growth of Cascade Bancorp share price, the bank's employees haven't shared that experience. They are in the fortunate position of considering tax strategies for their capital gains instead of losses. "The need was definitely identified for many of us who had options for a number of years," Biss said. "We needed tax planning and option exercise planning." Net Worth Strategies' presentation made enough of a positive impression that Bank of the Cascades decided to use the company for further monitoring and planning services.
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