How To Guide For: Understanding Employee Stock Options & Why Companies Are Offering Them

Stock options from your employer give you the right to buy a specific number of shares of your company's stock during a time and at a price that your employer specifies. Many companies use employee stock option plans to compensate, retain, and attract employees. These plans are contracts between a company and its employees. The benefit of a stock option is that the price the company sets on the stock (called the grant or strike price) is discounted and is usually the market price of the stock at the time the employee is given the options. Since those options cannot be exercised for some time, the hope is that the price of the shares will go up so that selling them later at a higher market price will yield a profit. Another benefit to having stock option plans is that it can be a flexible way for companies to share ownership with employees, reward them for performance, and attract and retain a motivated staff. To get more in depth information about employee stock options and why companies are offering them click on the pictures below to read the articles.