Employee Stock Option
An employee stock option gives a worker the contractual right to buy employer shares at a fixed exercise price, subject to vesting, expiration, and plan rules.
Employee stock option grants, option plans, and option pools affect compensation, vesting, dilution, accounting, and employee exercise decisions.
Employee stock options connect an individual compensation grant to a company-wide equity program. The pages in this section distinguish the employee’s contractual right from the plan that authorizes awards and the share reserve available for future grants. For calls and puts traded on stocks or exchange-traded products, use Equity Option instead.
Use the grant-level Employee Stock Option guide for vesting, exercise economics, expiration, tax boundaries, and employee risk. Use the plan and pool pages when the question concerns governance, award capacity, compensation design, or dilution.
| Concept | Use it when the question is about |
|---|---|
| Employee Stock Option | One employee’s grant, including exercise price, vesting, expiration, exercise, and resulting shares. |
| Stock Option Plan | The company-approved framework for eligibility, grants, vesting, exercise, settlement, and plan administration. |
| Option Pool | Shares reserved for future awards and the resulting capitalization and dilution analysis. |
Do not treat employee options, listed options, restricted stock units, stock appreciation rights, and employee stock purchase plans as interchangeable. Tax, securities, accounting, and employment-law consequences depend on the award and jurisdiction; this section provides educational context rather than individual advice.
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An employee stock option gives a worker the contractual right to buy employer shares at a fixed exercise price, subject to vesting, expiration, and plan rules.
An option pool is the share or award capacity reserved for future equity compensation, affecting hiring capacity, cap-table ownership, and potential dilution.
A stock option plan is the company-level framework that authorizes option grants, sets award rules, and controls the share reserve, administration, and potential dilution.