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Basics

Learn core knowledge about stock grants. Browse an overview of this section below, or explore the subtopics to the left.

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  Articles   FAQs  

Strategies For Negotiating A Compensation Package In Down Markets This is premium content

Chris Murphy
NEW! A down market provides ideal circumstances for negotiating a larger stake of equity compensation as part of your pay package. With companies looking to conserve cash and find effective ways to recruit, retain, and motivate executives and key employees, your interest in this type of compensation may be well received. This article explores the possibilities you may want to consider if this opportunity arises.

Stomach Volatility In Your Company's Stock Without Losing Your Mind

Joanna Glasner and Bruce Brumberg
Don't be discouraged by stock market volatility and underwater stock options. As the experts note, stock grants are tools for building wealth in the long term.

How To Avoid The Most Common Stock Option Mistakes (Part 1)

Beth Walker
Avoid the mistakes others made during prior ups and downs in the stock markets. Common mistakes arise in nine different situations, including termination, mergers, financial planning, term expiration, and life events.

Stockbrokers' Secrets (Part 4): What I Tell My Best Clients About Down-Market Strategy This is premium content

W.E.B. Bantling
Market declines rattle even the most experienced stock option veterans (and their advisors). If you are less than fully prepared to cope with the emotional toll caused by an uncertain market, consider these 10 topics.

Stock Option Valuation And Your Exercise Strategy This is premium content

Samuel D. Swisher
When should you exercise nonqualified stock options? You need a decision-making process that removes guesswork and emotions. Otherwise, you're likely to exercise too soon or too late.

How To Avoid The Most Common Stock Option Mistakes (Part 2) This is premium content

Beth Walker
Avoid the errors that many people have made, including mistakes that stem from major life events and taxes.

Better Late Than Never: Stock Option Strategy For The Market Upturn This is premium content

Michael Beriss
The stock markets will one day rise again. When they do, question the urge to exercise your options for quick profits as soon as possible: exercising too early can be a big mistake.

What Are My Stock Options Worth? This is premium content

Richard Friedman
Your company just gave you a stock option grant, or your existing options are underwater. You wonder: "What are my stock options worth? Are they worth anything at all?" Learn about different valuation methods, including Black-Scholes.

Stock Option Fundamentals (Part 1): Know Your Goals And Terms

Marilyn Renninger
Stock options aren't just for the folks on mahogany row any more. But turning stock options into the real green stuff takes some know-how. You need to know certain features of your grant to decide when to exercise your options and sell the stock.

How Does Your Company's Stock Plan Compare? (Part 1) This is premium content

Kate Victory
UPDATED! How typical are your grants of stock options or restricted stock? Compare their terms and provisions with the results of the NASPP's Domestic Stock Plan Design & Administration Survey.

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What is a vesting schedule?


A vesting schedule dictates when you may exercise your stock options or when the forfeiture restrictions lapse on restricted stock. A schedule is time-based if you must...

How is my stock grant's exercise price set? This is premium content


The full board of directors, the compensation committee, or an executive with expressly delegated authority...

Why is vesting important to me?


Unless you complete the required service period of work at your company or reach the performance target...

How is fair market value (FMV) determined for setting my exercise price? What are common company practices? This is premium content


In most cases, your exercise price for stock options is...

What is a typical vesting schedule? This is premium content


Graded vesting is more common than cliff vesting...

How are vesting schedules established? This is premium content


Vesting schedules are either established in advance by the board of directors when it approves the...

Other than paying the exercise price, what else must I do to exercise an option?


The specific steps vary among companies. You usually first need to make an irrevocable election to exercise...

If my options are vested and have not expired or been forfeited, can my company prevent me from exercising them? This is premium content


Perhaps. Your stock plan or grant agreement may provide that the company can refuse to allow exercises if...

Are there different types of time-based vesting schedules? Which are most common? This is premium content


Yes. Vesting schedules provide for either "cliff" vesting or "graded" vesting...

Is my employer required by law to give me choices in how I exercise my options? What are the most common methods? This is premium content


No. Your company has full discretion...

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Core Concepts   
Benefits   
Grants   
Vesting   
Exercise   
Sales   
Valuation & Expensing   
Alternatives   
Underwater Options   


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Featured FAQs
NEW! If my stock options are scheduled to expire on a holiday or a weekend, is the last possible exercise date before or after then? This is premium content
You need to check your stock plan's provisions and the procedures/practices followed by your company or any outside stock plan administration firm. Usually...
NEW! If I lose my job but I am then rehired, can unvested stock options be reinstated, or can the exercise period of my vested options be extended to the end of the original term?
While being rehired is great news, the bad news is that the unvested options were canceled or forfeited when you were laid off, regardless of the reason for termination. As for the vested options...
NEW! Do you have a simple chart that compares the tax treatment of stock options, restricted stock, RSUs, and ESPPs?
The chart below gives the types of taxes, and when they are triggered, for various forms of equity compensation granted in the United States...