Stock Options Price Employee Company's Time Make Shares

"Employee stock options" are sometimes part of a "compensation package" (all the different ways someone is paid for his or her work). A "stock option" gives employees the "right" (the ability to do something), but not the "obligation" (something that one must do), to buy a certain number of shares of the company's stock at a "set" (already established) price at a specific time in the future. If the company's share price at that time is higher than the price that was set in the stock option, then the employee will be buying those shares below the "market price" (the price at which people are currently buying and selling something), which will present an opportunity for the employee to make money. However, if the company's share price at that future time is lower than the market price, the employee will choose not to "exercise" (use; act upon) the stock option.

In the past, stock options were normally offered only to executive-level staff, but now it is more common for stock options to be offered to all employees, even some "entry-level" (just beginning one's career) employees, especially at "startup companies" (companies that are just beginning), which may not have a lot of cash to pay high salaries, but seem to have "high potential for" (a strong likelihood of) being profitable in the future.

Companies offer stock options to employees, because they are a useful tool for attracting highly qualified applicants. Stock options also make employees feel more like owners and business partners. Employees with stock options should be willing to work harder, because they know that if the company succeeds, they will make more money.