Stock Options

What are Stock Options?

Stock options are a form of equity compensation that grants employees the right to purchase company stock at a predetermined price, known as the exercise price. This price is often set lower than the market value, allowing employees to benefit from the company’s growth. Stock options can incentivize employees to contribute to the company’s success and align their interests with those of shareholders.

Key Aspects of Stock Options

• Vesting Schedule: Determines when employees can exercise their stock options.
• Exercise Price: The price at which employees can buy the stock.
• Expiration Date: The deadline by which the options must be exercised.

Related Terms and Concepts

Equity compensation, vesting, employee benefits, incentive plans