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1: PROCEDURE issue_bonus (a_emp_id NUMBER, 2: a_bonus_pct NUMBER, 3: a_min NUMBER, 4: a_min_amt NUMBER) 5: IS 6: emp_sal NUMBER; 7: bonus NUMBER; 8: BEGIN 9: SELECT salary INTO emp_sal FROM employee 10: WHERE id = a_emp_id; 11: IF ((emp_sal < a_min) OR (emp_sal IS NULL)) THEN 12: bonus := a_min_amt; 13: ELSE 14: bonus := emp_sal * a_bonus_pct; 15: END IF; 16: INSERT INTO bonus_hist (emp_id, date_issued, amount) 17: VALUES (a_emp_id, SYSDATE, bonus);

x2 (n)

18: EXCEPTION 19: WHEN NO_DATA_FOUND 20: THEN 21: DBMS_OUTPUTput_line('Error'); 22: END issue_bonus;



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112 - Employee Bene ts Planning (2) Cliff vesting All options become exercisable at one time (3) Step vesting The percentage of exercisable options varies year to year (4) Performance vesting Options become vested in the year the company achieves a particular goal (eg, revenue or price/share goal) (5) Early vesting (accelerated exercise) In this type of arrangement, employees are allowed to immediately exercise options when they are granted For each option exercise, they receive a share of restricted stock, which is subject to a holding period that is based on the stock option plan s original vesting schedule E Expiration (1) Generally, employees have 10 years (or less) to exercise the option (2) Terminated employees may have 30 to 90 days after termination to exercise vested options; the period may extend to six months to one year in the event of death or disability F Availability to nonemployees (directors, board members, etc) An individual must be an employee to bene t from an ISO G Cashless exercise/same day sale No money is exchanged A broker lends money to the employee to purchase shares and then sells them immediately for a fee H Potential problems include expiration of the option, termination from employment, and overallocation 2 Incentive stock options (ISO) A Income tax implications (regular, AMT, basis) (1) Upon grant Income not reported; no income tax due (2) Upon exercise No income for calculating regular tax Difference between the fair market value (FMV) at exercise and exercise price (the bargain element or spread ) is an adjustment item for calculating the alternative minimum tax (AMT) (3) Upon (qualifying) sale For AMT, long-term capital gain is difference between FMV at time of sale and FMV at time of exercise For regular tax, long-term capital gain is difference between FMV at time of sale and exercise price (4) Employer receives no tax deduction, unless holding requirement is not satis ed B Holding period requirements for a qualifying sale Shares must be held for at least one year after the option is exercised and for at least two years after the option is granted (1) If the holding period requirement is not met, a disqualifying disposition occurs and the appreciation on the sale (untaxed bargain element plus other appreciation) will be taxed as ordinary income (2) An employee receiving the ISO is required to continue as an employee from the time of the grant of the options until at least three months before the exercise If not, options are converted to NSOs C Disqualifying dispositions If the holding requirements are not satis ed, then a portion of the employee s pro t is taxed as compensation and the employer is allowed a deduction for that compensation The other portion is taxed to the optionee as a short-term capital gain D Employee bene t analysis and application Options may be granted to executives, key employees, or other groups of employees on a discriminatory basis 3 Nonquali ed stock options (NSO) A Income tax implications (regular, AMT, basis) (1) Upon grant No income tax is due.





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dollar fell from just over 1 US dollar in 1976 to a low of 63 cents and has remained below 75 US cents for almost 10 years Canada s adjustment process was not painless, but it was relatively gradual and did not involve any panics In contrast, Mexico took the Kellermans route In the mid-1980s, my buddies and I used to make surf trips from San Diego down to Mexico s Baja peninsula Along the way we saw advertisements for Mexican investments guaranteed to return 40% per year This seemed like an amazing deal, and some of my friends took up the offers For a time, my surf friends earned high interest rates on their Mexican investments The process was very simple: Convert some US dollars into Mexican pesos and invest the pesos for a year.

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Line 1 shows that procedures can be named and accept input arguments (just like regular functions in other languages) Lines 9 and 16 show that it's very simple to issue SQL statements, and integrate their results with local variables (emp_sal, in this case) Lines 11 through 15 show that we can write conditional statements In fact, languages like PL/SQL typically support standard control flow constructs like IFTHENELSE and various looping constructs like FOR and WHILE Lines 18 through 21 show that exception handling is supported

Earn 40% on your pesos in a year, get them back, and convert your pesos into dollars A $1,000 investment returned $1,400 just 12 months later Not too shabby! Furthermore, the deposits were guaranteed to return 40% more pesos than invested There are few things more expensive than free lunches, especially in the investing world The catch is that the Mexican deposits were guaranteed to return 40% more in pesos The dollar value of those pesos was not guaranteed Not to worry, though, how much can a peso devalue in a year As you might expect, this story involves the Mexican current account In the early 1990s, Mexico was running a current account deficit that was 7% the size of its economy As we have learned, such deficits are unsustainable and the road to repayment usually includes devaluing the currency.

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