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Employee Stock Option

   Also found in: Dictionary/thesaurus, Legal, Acronyms, Encyclopedia, Wikipedia 0.01 sec.
Stock Option
A non-tradeable call option giving an employee at a publicly-traded company the right to buy shares in that company for a certain price. Stock options in this sense are often a part of compensation for major and mid-level executives in large publicly-traded companies. If the share price for the company increases, stock options can be very profitable for the employee. These stock options have certain rules governing when and how the option can be exercised.

employee stock option

Employee Stock Option
An option granted to an employee to purchase the employer's stock. Employee stock options to which special income tax treatment is accorded are known as statutory options.


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[ILLUSTRATION OMITTED] EXECUTIVE SUMMARY * Employee stock options (ESOs) more closely resemble warrants than traditional options in that they result in the issuance of additional shares of stock.
This report drawn from research by the Organisation for Economic Co-operation and Development gives corporations a better understanding of how tax policies work on domestic and cross-border employee stock option programs, starting with the rather startling news that tax neutrality is a significant factor to consider, along with the employee's aversion to tax-related risk.
Valuation of Employee Stock Options and Other Equity-Based Instruments: Short Term and Long-Term Strategies for Complying with FAS 123R and for Optimizing the Performance of Equity-Based Compensation Programs under the New Standard.
 
 
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