Stock Options and Agreements
Many companies use employee stock options plans to retain and attract employees, the objective being to give employees an incentive to behave in ways that will boost the company’s stock price. If the company’s stock market price or equity value rises above the call price, the employee could exercise the option, pay the exercise price and would be issued with ordinary shares in the company. The employee would experience a direct financial benefit of the difference between the market and the exercise prices. If the market price falls below the stock exercise price at the time near expiration, the employee is not obligated to exercise the option, in which case the option will lapse. Restrictions on the option, such as vesting and non-transferring, attempt to align the holder’s interest with those of the business shareholders. Use of such agreements are often an effective method to incentivizing management and other key employees to make an overall business successful. To speak with an attorney about drafting, negotiating or executing a stock option agreement, contact our Firm now.