Stock Options Explained - Employee Stock Option Explained

Stock Options Explained

Stock Options Explained

So you are about to accept a new job. Stock options are part of your compensation but you are not sure what they are. Well you have come to the right place. This short article will tell you what you need to know and a bit more. Stock Options Explained

When a soon to be successful company is just starting out, often times, they don't have the liquid cash on hand to pay the salaries of everyone they hire. Often times, these companies go out and hire the best in the business to get their company off the ground, and these high profile people demand a high profile salary that the company just can't meet a the moment. The answer for both employer and employee alike has been stock options. With stock options, you give an employer a stake in how the company performs in the future that goes beyond their every day job duties. If the company ends up being a smashing success, the stock price will soar and everyone who has options will make a lot of money. If the company doesn't, the employees lose out. Employee stock options carry significant risk but they also have the potential for significant reward.

Getting in on the ground floor isn't the only way to get in on employee stock options. Often times, when promotions are given in a particular company, employee stock options are a part of the deal. They are also used to help lure away top grade executives to the competition since the potential of the stock option is so high and carries such a significant possible reward. But some companies have decided to take the world of employee stock options one step further. A handful of major corporations now give stock options to every employee once or twice a year, from the president of the company to the folks working in the mail room. This serves to unify a workforce since now every person in the company from the bottom up has motivation to see the company do well that extends beyond doing a 9-5 job. If the stock does well enough, you might even be able to retire on the money you make from employee stock options. Employee stock options are a wonderful motivator and a great way to win over and keep loyal employees. Stock Options Explained

Stock Options Explained - Employee Stock Option Explained

By: Trading Expert

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