Glossary
Stock Option
Stock options are a form of equity-based compensation that give an employee, investor, or other stakeholders the right (but not the obligation) to buy company shares at a predefined price (exercise or strike price) after a specific vesting period. They are commonly used to attract and retain talent, aligning employee incentives with company growth.
What Are Stock Options?
Stock options are a form of equity-based compensation that give an employee, investor, or other stakeholders the right (but not the obligation) to buy company shares at a predefined price (exercise or strike price) after a specific vesting period. They are commonly used to attract and retain talent, aligning employee incentives with company growth.
Key Features of Stock Options
- Grant Date: The date on which the stock options are awarded.
- Vesting Period: A timeframe during which the recipient must stay with the company before they can exercise the options.
- Exercise Price: The price at which the recipient can purchase the shares, usually set at the market value at the time of grant.
- Expiration Date: A deadline by which the options must be exercised before they become void.
- Liquidity Event Requirement: In some cases, options can only be exercised after an IPO or acquisition.