Options
What are Options?
Stock options give employees the right to purchase company stock at a predetermined price (strike price) within a specific period. If the stock price rises above the strike price, employees can buy at a discount and potentially earn a profit.

What are the Benefits of Options?
Attractive incentive
Helps attract and retain top talent in competitive industries.
Tax advantages
Options can offer favorable tax treatment compared to direct equity compensation.
Encourages company growth
Employees are motivated to contribute to long-term success.
Why Set Up Options?
Long-term employee retention
Stock options encourage employees to stay with the company and contribute to its growth.
Aligns interests with shareholders
Employees benefit when the company's stock value increases.Potential for financial gain
Employees can purchase stock at a lower price and profit if the stock appreciates.
How to Set Up Options?
Set a vesting schedule
Establish when employees can exercise their options.Establish vesting schedules
Determine when and how the options or SARs will vest (i.e., the employee earns the right to exercise them).Determine the strike price
Choose a fair and competitive price for stock purchase.
Examples of Companies Using Options
Google
Google famously used stock options to incentivize early employees and align their interests with the long-term growth of the company.
Uber