This excerpt taken from the NENG DEF 14A filed Jan 28, 2009.
Nonstatutory Stock Options
A Participant will not have income upon the grant of a nonstatutory stock option. A Participant will have compensation income upon the exercise of a nonstatutory stock option equal to the value of the stock on the day the Participant exercised the option less the exercise price. Upon sale of the stock, the Participant will have capital gain or loss equal to the difference between the sales proceeds and the value of the stock on the day the option was exercised. This capital gain or loss will be long-term if the Participant has held the stock for more than one year and otherwise will be short-term.