Employee stock options are a facet of a compensation contract that permits the employee the option to purchase equity in the company.
Employee stock options are a form of compensation that companies offer to their employees. They give employees the opportunity to purchase company stock at a discounted price, usually at the current market price at the time the options are granted.
When an employee is given stock options, they have a certain amount of time to decide whether or not they want to exercise the options and purchase the stock. The employee will pay the discounted price for the stock, and if the stock's value goes up, the employee can then sell the stock for a profit.
When you exercise your stock options, you will have to pay taxes on the difference between the exercise price and the market value of the stock at the time you exercise. The tax implications can be complex, so it's important to consult a tax professional before making a decision.
Valuing your employee stock options can be difficult because it depends on the future performance of the company and the stock market. You can use online calculators to get an estimate of the value of your options, but it's important to keep in mind that these are just estimates and the actual value can be different.
To exercise your stock options, you need to contact your company's stock plan administrator and let them know you want to exercise your options. They will then walk you through the process and provide you with the necessary paperwork.
If you leave a company, the terms of your stock options will be laid out in your stock option agreement. Depending on the agreement, your options may still be valid for a certain period of time or may be immediately forfeited. It's important to understand the terms of your agreement before leaving a company so you know what to expect with your stock options.