The following is not meant to be legal advice.
Stock options give employees at some companies (usually prevalent in high tech) the right to buy “Company” stock sometime in the future at the “option price”.
Stock options are given to employees as a part of their compensation. They pay nothing for the stock options at grant. The employees may be required to pay taxes on the gain when they exercise based on the country’s specific tax regulations.
Vesting refers to the process of an option becoming nonforfeitable. The options vest, become available for exercise as time proceeds. The right to purchase the option shares at a fixed price (the “exercise price”) over the term of the option.
As the value of the Company’s shares increases, the price remains the same until the option expires. Usually, only the Board of Directors, or a committee of the Board, can grant stock options. Federal and state laws govern the Company’s right to sell stock.
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