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.

SARs and Options

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

Uber has granted stock options and SARs to employees, particularly during key growth phases, to help attract and retain talent.

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STAK

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Reliable financing that offers steady returns for investors while preserving company equity. Perfect for stable businesses seeking operational or growth capital. A classic tool for building financial stability.

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Convertible Loans

Flexible funding that converts into equity, ideal for startups and scaling businesses. Attracts investors with potential discounts and delayed dilution. A streamlined way to secure growth capital.

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