Stock Options

Stock optionsare a special form of incentive compensation. A stock optionis the right to purchase a specific number of shares of company stock at a specific price during a specific price during a specific period. The executive thus hopes to profit by exercising his or her option to buy the shares in the future but at today’s price. The assumption is that the price of the stock will go up. Unfortunately, this depends partly on consideration outside the manager’s control, such as general economic and market conditions. When the market plummets, employers must scrabble to sweeten their managers’ stock option plans. When employers don’t the evidence suggests that the executives do leave.

Stock options is the rights to buy a specified amount of company stock at a given price within a given time period.

Stock option is an option on an individual stock.