Velez, like a lot of technology students, has kept a keen eye on the uncertain ways of the stock market. For the upcoming Class of 2001, the market correction that sent startups and dot-coms to an early grave also sent a strong message, prompting students to scrutinize stock options in their job offers far more carefully now.

"The New Economy downturn is probably good in a way," said John Putzier, a professor at Pittsburgh's Carnegie-Mellon University, president of FirStep Inc. and author of "Get Weird!: 101 Innovative Ways to Make Your Company a Great Place to Work."

"The downturn is forcing people to start looking at the kinds of things they should have been looking at all along when evaluating jobs with companies," Putzier said. "Instead of an eye on getting rich overnight, candidates are now looking at the overall company, its place in the market, its future and the big picture."

Vinay Harshadbhai Patel, a student at the University of Michigan, agreed. He said that while stock options are definitely a factor in job offers he is considering, the importance he gives them varies based on the company that is offering them.

The extent to which a job candidate will accept stock options as compensation depends on the degree of risk a candidate is willing to accept. Well-established companies can offer more security and a longer, generally more stable financial history, while enticing startups may offer a ground-floor opportunity surrounding a new idea. Either way, a little research when evaluating stock options in job offers can mean the difference between an educated decision and a blind guess.

Stock options have become a great job perk for obvious reasons. They offer the chance for added financial gain. They can build loyalty to an employer. They offer employees a stake in the company. And, when the market is up, it is a win-win situation for the company and its shareholders. Handing out options has become so popular that the National Center for Employee Ownership estimates that more than 10 million people are receiving stock options today, compared to one million people in 1992.

Enticements only

Still, it is important to know that stock options are not shares of a company. They are an enticement that may or may not pay off over time. Options offer the right to purchase stock in a company after an allotted time, known as the vesting period. The company outlines the exact terms in a contract. A vesting period is usually measured in years, and a common vesting schedule allows for 25 percent of the total number of options granted to mature each year, for four years.

The financial gain comes when the exercise price of a stock option at the time it is granted is lower than its fair market value when it is sold. Similarly, more options do not always translate into more money. The value resides in the growth between the exercise price and the later fair market value. The chart below shows a sampling of options from public companies and their values over time.

While stock options can be a valuable addition to a compensation package, it is important not to overestimate their potential. According to Bruce Brumberg, editor in chief of myStockOptions.com, a strong salary is still the best benchmark upon which to build.

"College students may have a misperception that stock options are a 'get-rich-quick' form of compensation," Brumberg said. "But they should look at them as a long-term incentive that adds spark to a salary, not as a substitute for a good paycheck."

The University of Michigan's Patel agreed. "I've been considering a few companies that have been giving fair amounts of stock options over a four-year period," Patel said, "but the stock is so cheap right now that I could buy the equivalent amount on my own and make a much better earning. I really think cash income and bonuses are the most appealing factor right now."

Stock options have the potential to deliver a lot of value, but their role in a compensation package really comes down to one's personal-risk tolerance: How much of a sacrifice is one willing to make in terms of short-term cash compensation for the possibility of long-term equity compensation? These days, students consider the opportunity for options a plus, but they say that a good salary is a stronger prerequisite.

"I feel salary, signing bonus and location are far more important when evaluating a job offer," Velez said. "Perhaps it's because I'm less of a gambler. Perhaps it's because many dot-coms that people expected to make millions off of are now bust."

Austin Che, a student at Stanford University, similarly isn't placing much emphasis on options as a part of his compensation.

"Especially now with the market as it is, I find it really difficult to give much importance to options," Che said. "Of course, this probably depends on what type of job and company I'm looking at, and what my goals happen to be. But for any company that I'm likely to join at this point, I'd much rather have a higher base salary and forget about the options altogether."

Regardless of the stock markets, the labor market remains tight enough to allow discerning students like Che to search for the money up front. In a recent CNN.com poll, an overwhelming majority of people said they would be increasingly picky about the jobs they would accept after college in response to what the stock markets have done to the tech sector. A modest 6 percent felt they could not be picky in today's job market, saying that they would take what they could get for now. But 52 percent considered themselves "medium picky," saying they were cautious but optimistic about job opportunities. And 42 percent said they were "way picky" — the tech sector would rebound soon and they would call the shots in choosing jobs.

Picky or not, Putzier said it is up to the candidate to do his or her due diligence in investigating a job offer, the potential value of its stock options and the financial security it will provide.

"Most information isn't proprietary," Putzier said. "People just think it is. But when evaluating a job offer with stock options, or any job offer, you have to evaluate the whole opportunity.

"I like to encourage people to find companies that provide open-book management," Putzier added. "Those are the ones that will tell you how much access you will have to information about financials and future forecasts for the company and its market. If they aren't willing to share that type of information, it may be a sign that they have something to hide. Take a second look if that's the case."

Jeff Daniel is the CEO and founder of CollegeHire, an Austin, Texas, company that recruits students from 37 colleges and universities.

See related chart