EMPLOYEE STOCK OPTION PLAN
These are techniques and ways used by companies to attract and keep their employees. Employee stock option plan lets the employees buy a desired and specified number of shares of the company at the exercise price within a limited time period. This fixed price at which the employees purchase the shares of the company is known as the exercise price. The employee can purchase whole or some part of the mentioned shares that means a specified number of shares are given to the employees as an option whether to buy them or not. It solely depends on the individual how many shares he wants to buy among them. Usually offered price is much less than the market price of the share.
There are two types of employee stock option plan – incentive stock options and non-qualified option plans. Even after these two types of plan availability, there is flexibility and liquidity in the construction of the plan.
Employee stock option plans offer benefits not only to the company but also to the employees. The various benefits offered by the employee stock option plan are -
Employee stock option plan is really beneficial for the company. In case you have a startup, you can use this technique not only to impress your employee but also to reap the various benefits offered by this plan. Advantages provided are –
- Building a successful team – a successful team of employees is the one with many talents and also working with full dedication. This stock ownership technique is applied by many big organizations and firms for attracting great talented individuals that would prove as an investment to them. Offering the share does of the company at a great price will impress them and will also keep them longer with you. In fact, this will work like a magnet to search for experts in the field.
- More engagement of the employees- When we love what we are doing, the results are guaranteed. Same is the case with your employees if they are fully dedicated towards their work the success is the ultimate result. This employee stock option plan creates a sense of ownership – employees feel as if it’s their own company and work harder to achieve the goals set by the company. If the company performs really well, the success is guaranteed. In this case, the prices of their shares will also go higher and they will also get much benefit because of it. Hence, the stock option plan is beneficial for the success of your business.
- Benefits the employees also - As already mentioned above. If the company performs well this will enhance the market value of the shares of the employees. Employees also get a lot of benefit from this plan. They can earn much more in addition to their annual salaries.
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