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Employee stock option

Employee stock option

An employee stock option gives an employee the right to buy shares in the company in the future.

What is an employee stock option?

An employee stock option is a type of stock option program that gives an employee the right to buy shares in the limited company in the future at a set price. It is used to attract and retain key people, especially in startups.

 

Qualified employee stock options

Some employee options can be tax-favoured (qualified employee stock options). When the options are exercised, shares are issued, which affects the share capital and the cap table and must be recorded in the share ledger.

Record options
Henrik Kristensen, NVR
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Related terms

Qualified employee stock option (KPO)

A qualified employee stock option (KPO) is an option taxed favourably if statutory requirements are met.

Stock option program

A stock option program gives, for example, employees the right to buy shares in the future.

Equity option

An equity option is an option whose underlying asset is a share, either as a call or a put option.

Warrant

A warrant gives the right to subscribe for new shares in a company at a set price.