What is a stock option award?

Companies award stock options to recruit and retain key employees, executives and directors. These options give holders the right to buy the underlying shares at predetermined prices, known as strike prices, before specified expiration dates.

What does it mean when an employer gives you stock options?

An employee stock option is the right given to you by your employer to buy (“exercise”) a certain number of shares of company stock at a pre-set price (the “grant,” “strike” or “exercise” price) over a certain period of time (the “exercise period”). With some option grants, all shares vest after just one year.

How are stock option awards priced?

The idea is that the stocks will rise in value over time. For example, if a company has granted an individual the option to purchase 1,000 shares at $5 each (the grant price), and the market value of the stock rises to $15 per share (the exercise price), the individual can earn $10 per share, or $10,000.

How do you calculate the value of stock options?

The quick way of calculating the value of your options is to take the value of the company as given by the TechCrunch announcement of its latest funding round, divide by the number of outstanding shares and multiply by the number of options you have.

What do you need to know about stock option awards?

What Is a Stock Option Award? 1 Definition. A stock option is the option to buy a company’s stock at a set price. 2 Incentive Stock Options. An incentive stock option (ISO) is only offered to employees of a company. 3 Non-Qualifying Stock Options. 4 Exercising the Stock Option. 5 Tax Implications. …

Which is the best definition of a stock award?

Definition of Stock Award. Stock Award means any right to receive Common Stock granted under the Plan, including an Incentive Stock Option, a Nonstatutory Stock Option, a Restricted Stock Award, a Restricted Stock Unit Award, a Stock Appreciation Right, a Performance Stock Award or any Other Stock Award. Sample 1.

What does it mean to have an employee stock option?

An employee stock option is a grant to an employee giving the right to buy a certain number of shares in the company’s stock for a set price.

What is the purpose of stock option grants?

From the employer’s standpoint, the idea behind stock option grants is to give employees the incentive to align their interests with that of the shareholders. From the employee’s standpoint, a stock option grant is an opportunity to purchase stock in the company for which he or she works at a lower price.

What are the benefits of stock options?

The benefit of a stock option is the ability to buy shares in the future at a fixed price, even if the market value is higher than that amount when you make your purchase. Your ability to exercise your options is determined by a vesting schedule, which lists the number of shares an employee can purchase on specific dates thereafter.

What is an Equity Award?

Definition of Equity Awards. Equity Awards means any stock options, restricted stock, restricted stock units, stock appreciation rights, phantom stock or other equity based awards granted by the Company to the Executive.

What is annual equity grant?

Annual Equity Grant. At each annual stockholders’ meeting of the Company, each individual then serving as a Director or newly elected as a Director shall receive an equity grant under the Stock Incentive Plan, determined by the Committee, consisting of Restricted Stock, Restricted Stock Units and/or nonqualified stock options for Common Stock.

What are stock appreciation rights plan?

Stock appreciation rights are a type of incentive plan based on your stock’s value. Employees receive a bonus in cash or equivalent number of shares based on how much the stock value increases over a set period of time – usually from the date of granting the right up until the right is exercised.