Self-explanatory. I’m clueless. I just want to know how much money I’m going to be getting every month in total for my job.
In: Economics
“Stock options” when it comes to compensation is usually when a company offers you the “option” or invitation/right to purchase the company’s stock (ownership shares in the company) either at a reduced rate or at FMV but you get access to private classes of shares the public may not have access to.
Sometimes it’s very simple like above, sometimes it’s a choice of “pick to get $$$ compensation now or select to get the stock in lieu of the direct cash”
Most companies aren’t publicly traded, so these stocks can be “closely-held” and harder to invest into. You get the privilege of getting into this investment.
Later on, this stock may be worth much more or the company goes public and now you have a valuable asset you can sell much easier. Also sometimes the company will buy back that stock later and might buy it back from you for more, making you even more profit.
Why do companies offer this? For “buy in” from the employees. If you “own” part of the company, you are likely going to really bust ass to try and make the company successful so that you can sell the stock later for a profit. You are literally “invested in the company” in a small but real way. Also, for companies that are cash-strapped, it’s a great way to boost compensation without needing to waste real money. They do dilute their own ownership value by giving more shares away to others, but depending on the company and set up those shares might not be worth much at all, now or in the future. But you can sell the employee on “maybe you make money off this in the future!”
Some people love it, will forego day 1 $$$ comp to gamble on future value. Other people want nothing to do with the risk/gamble. “Fuck you, pay me.” And they mean day 1 cash in hand. Neither way is wrong, it’s a negotiation and offering
Latest Answers