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.
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.
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.
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.
Nick Bilton and Evelyn Rusli
The New York Times
Facebook's initial public offering will be lucrative for more than just its founders and top investors. Many people involved with Facebook in its early stages, including an artist who decorated the company's walls in exchange for stock rather than cash, stand to receive a big payout from the IPO.
Employee stock purchase plans can offer significant financial benefits, particularly with a good discount and a rising company stock price.
Human Resource Executive
Stock compensation, whether options, restricted stock, or performance shares, continues to be an important way to motivate and retain employees while providing a sense of ownership. Companies also continue to recognize that employee education and communications are important for ensuring that these grants are effective.
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.
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.
San Francisco Chronicle
Stock options remain a powerful lure for attracting employees to private companies, although attitudes and expectations have changed. Stock options let you participate in the value you're creating at your company, and their potential ranges from substantial wealth to nothing at all.
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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...
A company may make these grants for a variety of reasons. Surveys show that...
The compensation philosophies of companies are continually changing under the influence of many factors, from accounting rules to...
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...
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...
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...
If your company is publicly traded (e.g. listed on a stock exchange such as NYSE or NASDAQ), it is required to file various...
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...
You could mistakenly let the options expire without exercising them. You do not have your vested options for life...
You become an owner in your company, with all the financial upside and risks that any investment can bring. By participating in the plan...
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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