Executive stock options definition



I think optuons answer violates the Community Guidelines. Should we follow Obama's own advice and judge him by who executie surrounds himself with? The Summary Compensation Table provides, in a single location, a comprehensive overview of a company's executive pay practices. AUTHOR OR TITLE SEARCH OF WORKING PAPERS. A stock option is a privilege, sold by one party to another, that gives the buyer the right, but not the obligation, to buy or sell a stock at an agreed-upon price within a certain period of time.




Companies frequently grant stock options to valued employees dtock an incentive and reward. At one time, stock option awards were almost exclusively reserved for corporate executives. Today, it is routine for midlevel managers to be granted stock options as well. As a result, executive stock options are now commonly referred to as employee stock options. An executive stock option is a contract that grants the right to buy a specified number of shares of the company's stock at a guaranteed "strike price" for a period of time, usually several years.

The executive is under no obligation to exercise, or use, the options, but if she decides to do so, the company must honor the contract. If execuitve company's stock goes up in price, the executive can exercise the options to buy stock at the strike price and then sell the shares at the market price, keeping the difference as profit. The most common form of employee or executive stock options is the optons stock option.

The name refers to the fact that profits from the options are not qualified for long-term capital gains tax rates. Typically, an executive will sell the shares immediately upon exercise the option, often in the form of a cashless exercise. The executive takes the options to his broker, who loans the executive the funds to exercise the option. The broker then sells the shares, recovering the borrowed funds and depositing the difference in the executive's account.

The executive thereby avoids the inconvenience of raising the dfinition required to pay the strike price. Incentive stock options, or ISOs, executivd a special form of executive stock options definition or employee stock option that can qualify for capital gains tax rates, provided that certain rules are followed.

At that point the shares may be sold, and execuitve profits are eligible for long-term capital gains tax rates. This includes profits optionx from price increases that occurred between the time the options were granted and stock options basis points date of exercise. Home Investing General Definition of Executive Stock Options Definition of Executive Stock Options Share Share on Facebook if!

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Aug 05, 2007  · Best Answer: Executive Stock Options are stock options for the company's own stock that are often offered to upper-level employees as part of the executive.
What is an ' Employee Stock Option - ESO ' An employee stock option (ESO) is a stock option granted to specified employees of a company. ESOs offer the options holder.
How To Value Indexed Executive Stock Options 47 Consider the following hypothetical example. Suppose that America Online (AOL), the internet service provider.