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Why would a company issue employee stock options?

Stock options provide key employees with the option to purchase common stock at a specified price over an extended period of time. Stock options plans are great for employers and employees. Stock option plan provide an employee with the following:

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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 do employee stock options impact shares outstanding for a company?

    When stock options are granted to an employee, the total number of shares outstanding increases. Then, when those shares are exercised, the total number of shares decreases.

  • 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.