Making Incentive Stock Options Work for Your Company

Lorman Education Services

Find out if an incentive stock option plan is a good fit for your company.

While employers are always looking to provide pay to their employees to incentive and reward them, it is often unclear how to do so. One attractive way to reward and incentivize employees is to provide them with incentive stock options. Incentive stock options provide employees with an equity interest in the company such that a portion of their compensation is directly linked to the performance of the employer. While inventive stock options are a great way to provide incentive compensation to a company's employees, there are many requirements which must be satisfied in order for an award of Incentive Stock option to provide the biggest benefit possible to the employee.

This topic will help those individuals responsible for determining how to compensate employees and responsible for the compliance of employees' compensation to understand why incentive stock options are an attractive form of incentive compensation and understand the many requirements which must be satisfied to most effectively provide incentive stock options to employees.

Learning Objectives

• You will be able to describe the different types of equity compensation.
  
• You will be able to define what constitutes an Incentive Stock Option and understand the specific requirements which must be met for a stock option to constitute an Incentive Stock Option.
  
• You will be able to discuss the differences between Incentive Stock Options and Nonqualified Stock Options.
  
• You will be able to explain the reasons why a company would grant Incentive Stock Options over different forms of equity.

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