Offering employees stock options is a fantastic way for companies to reward employees and develop a motivated and creative workforce. An employee stock option is an offer by a firm to buy a certain number of its shares at a specific price (often below market) and by a certain date. Employees and employers pre-agree on the number of shares they may purchase and the length of the vesting period before they buy the stock. The contract that both parties sign contains all of this information.
The option does not obligate the employee to buy all the specified shares. They can often buy stock anytime between the offer and the last exercise date, and the decision is entirely up to them. Every employee need not receive stock options, and many companies decide to reserve them for a select group of essential positions.
Types of employee stock options plan (ESOP)
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