What is a service period or vesting period for stock options?
The service or vesting period is the difference between the grant date and exercise date. For example, if a company issued stock options to an employee, but they had to remain with the company for 3 years, the service or vesting period would be 3 years.
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What are employee stock options?
Stock options are typically granted to executives and employees to align their efforts with the overall goals of the organization. When a company issues stock options to employees, employees will hold the options over a service or vesting period, and then exercise them at a future date. Each stock option will have an exercise price, […]
How is total stock compensation expense calculated?
Total stock compensation expense is calculated by taking the number of stock options granted and multiplying by the fair market value on the grant date. Once you have the total stock option expense, divide by the vesting or service period (# of years), and that determines how much stock compensation expense is recorded in each […]