A key component of compensation for many individuals who work for privately-held or public companies is the opportunity to own company stock. This is often made available through an employee ownership plan. If your employer provides you with this benefit, it’s important to understand how the employee stock options (ESO) work, and the most effective ways to take advantage of them.
The opportunity to own shares in the firm you work for can, at times, be extremely valuable. In other circumstances, the actual financial benefit may turn out to be limited. Much depends on the level of success the company enjoys. One of the most appealing aspects of stock options is that it gives you a greater stake in the potential success of the company.
Prices and dates to know
Before you make any decisions about how to take advantage of stock options, you need to understand the price you will pay for shares of company stock and the timing of those purchases.
