Incentive stock options are a powerful compensation tool that can help you grow your wealth. Companies award them to employees as a retention vehicle, to reward specific successes or as ...
Incentive stock options are a powerful compensation tool that can help you grow your wealth. Companies award them to employees as a retention vehicle, to reward specific successes or as an incentive when trying to attract new employees. There are several advantages to incentive stock options. Because they can provide you with a significant opportunity, it’s important to understand them more fully. The Mechanics of an Incentive Stock Option To begin with, it’s helpful to understand more about incentive stock options, including how they work and how you can take advantage of their potential. An incentive stock option is a stock option that gives you the right to purchase shares of stock at a predetermined price. Unlike other forms of stock options, such as non-qualified stock options, incentive stock options can only be given to company employees. When you are awarded incentive stock options, the company will provide you with an option grant, a document that specifies the number of shares you’re eligible to purchase and what’s called the “vesting schedule,” which dictates the dates the options are available to be sold. The incentive stock option grant will also include a share price, called the “exercise” price, which is typically… Read More »
