Stock Options vs. 401(k): Which Should You Choose?

    March 31, 2003

Dear Louise,
Which is the better compensation benefit for me when I am negotiating a new salary: stock options or a generous 401(k) match?

– John Doyle

Hi John,

Your accountant or financial advisor will advise you to take the stock options provided your new position is with a growth company that is projected to continue its strong performance. Otherwise, go with a 401(k) match.

To make an informed decision, evaluate the company’s stock performance statistics. Review the per-share data (book value, earnings and sales), valuation ratios (price/book, price/earnings and price/sales), management effectiveness (return on assets and return on equity) and financial strength (long-term debt/equity). Compare the quarterly data with performance during prior years.

As long as the company demonstrates steady growth, the stock options will likely be more valuable to you.

Louise Garver, CMP, CPRW, JCTC, CEIP, MCDP, has assisted senior executives and management clients worldwide in all aspects of job search, interviewing and negotiations, development of resume and marketing letters, career transition and career management since 1985. President of Career Directions, LLC, she is an award-winning, published and certified career coach, professional resume writer, outplacement consultant and former corporate recruiter. For help in winning the career your deserve, visit

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