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Preventing Irrational Decisions About Selling Company Stock Or Exercising Options

Bruce Brumberg
Whether you are a novice or advanced investor, it can be hard to decide what to do with your company's stock grants. Should you exercise options now or wait? Should you hold company stock at vesting or sell it and reinvest? The study of behavioral economics and investor psychology offers insights that can help.

Psychological Factors Affect Your Stock Option Exercise Decisions This is premium content

Professor Steven Huddart
It is tempting to exercise and sell your stock options when your company's stock price hits new highs or becomes worryingly volatile. However, this decision may not be in your best long-term financial interest. This article exames the psychological factors that can, along with economic motives, influence your stock option choices.

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.

Manage Your Expectations To Avoid The Option Blues

Loren Rodgers
You may feel let down by your stock options if your company's stock price has dropped, leaving your options underwater. Getting less than you expected is something that inevitably occurs in a free market, and it is helpful to be prepared for losses as well as gains.

$1.6 Million For Apple Employees

Troy Onink
Forbes.com
Employee stock purchase plans can offer significant financial benefits, particularly with a good discount and a rising company stock price.

When The Share Price Is A Factor In Pay

Kelley Holland
The New York Times
For many employees, stock-based compensation represents the biggest realistic chance of an increase in personal wealth, given small rises in average salary.

Google Options Make Masseuse A Multimillionaire

Katie Hafner
The New York Times
A happy tale about the difference that stock options can make in the lives of ordinary workers, especially at pre-IPO companies which become successful and then go public.

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Are stock options, restricted stock, and ESPP participation free?

By granting you a stock option, your company gives you the right to buy its stock at a fixed price during a specified period. Restricted stock is usually granted without any cost to you. With an employee stock purchase plan (ESPP), you do have a cost when you buy shares. For companies, stock options, restricted stock, and ESPPs are not free...

Why do companies grant stock options, restricted stock, and other equity awards?

A company may grant equity awards for a variety of reasons. Surveys show that...

How many people have or are eligible for stock options, restricted stock/RSUs, or ESPPs? This is premium content

The types and distribution of stock grants are changing, along with the patterns of eligibility. Data from research and surveys can give a sense of how prevalent equity awards are...

Why do many companies grant restricted stock and RSUs instead of stock options? This is premium content

The compensation philosophies of companies are continually changing under the influence of many factors, from accounting rules to...

What are the benefits of participating in an employee stock purchase plan?

You become an owner in your company, with all the financial upside and risks that any investment can bring. By participating in the plan...

Do equity awards really motivate employees? This is premium content

Ownership incentives such as stock options, restricted stock, performance shares, and ESPPs help motivate, retain, and recruit employees. Various studies have obtained empirical evidence to support this notion. For example...

Why do stock options offer greater financial benefits than simply buying shares of company stock in the open market?

Stock options give you the opportunity to buy shares of stock at a price that is fixed on the grant date, regardless of what the market price is when you exercise...

Why should I care about stock options?

Stock options allow employees and other service-providers to share in the growth of a company's value without risking their money until they exercise the options to buy the shares...

How can I find out whether my employer offers stock options or restricted stock, or has an ESPP? This is premium content

If your company is publicly traded (e.g. listed on a stock exchange such as NYSE or NASDAQ), it is required to file various...

Why doesn't my employer offer me equity compensation?

If your employer is a for-profit corporation, it probably can offer stock options, restricted stock, or other types of equity compensation to its employees. There may, however, be many reasons why your employer is not offering stock grants...

If I remain with the company for the duration of the vesting schedule, is there any way I can lose the benefit of my option?

You could mistakenly let the options expire without exercising them. You do not have your vested options for life...

How much will my options be worth in the future? This is premium content

The future value and its certainty depend on whether you are at a public or a private company. You determine the practical cash value of options in public companies by noting the...

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