Everything You Should Know About Employee Stock Options

For any company to function and flourish, having a good team of employees is necessary. Many employees join a firm even if the salary is lower than normal expectations hoping that they receive a raise later on once they become used to working in the firm. However, these days, some companies and many startups have started offering employee stock options to compensate the employees alternatively as part of the employee package. As an employee, if you are being offered the same, you need to have a good knowledge of the functioning of stock options. You can either go through some helpful guides that will enlighten you about the concept or you can seek the professional assistance of a financial advisor but that would get a little expensive. Hence, you can instead read this helpful guide that will give you a brief yet complete and effective knowledge about stock options and everything there is to know about it.

Meaning of stock options

What are stock options? Having an idea about the meaning of stock options are essential when you are planning to sell them or receiving them for your firm. Stock options are a compensation form which companies and firms grant to their employees, investors, consultants, contractors, and the like.

These options come on a contract basis and enable an employee to gain the right to exercise or purchase a defined number of the company’s stock shares at a predetermined price which can also be referred to as the grand price. However, this offer is not meant to last forever. The number of these stock shares that the company setup malaysia depends on the firm. It will also depend on the skills of the employee and how long he or she has been working for the firm.

Things to remember

Here are some things you need to keep in mind when you are looking to understand about stock options which are as follows:-

  • The contract of the stock option will include a date which is the grant date and the day when your options start being vested on you. Following this, you can either exercise or buy the option.
  • The options won’t be granted to you in totality. It will be vested to you gradually over the vesting period.

These are some important things about employee stock options you need to keep in mind .