Glossary > Employment Law > Benefits And Compensation > General

Stock Options

Stock options are a type of employee benefit that gives workers the right to buy company stock at a predetermined price within a specified period.

Example #1

John works for a tech company that offers him stock options as part of his compensation package. This means that he has the option to purchase a set number of company shares at a fixed price in the future.

Example #2

Sara's employer grants her stock options as part of her performance bonus. She can choose to exercise these options to buy shares at a discounted rate if she believes the company's stock price will rise.

Misuse

Misuse of stock options can occur when employers manipulate stock prices or withhold crucial information, unfairly impacting employees' ability to benefit from these options. It's essential to regulate and monitor stock option programs to prevent abuse and protect employees' interests.

Benefits

Stock options can be beneficial for employees as they provide an opportunity to share in the company's success by owning a piece of the business. If the company performs well and its stock price increases, employees with stock options can potentially profit from the growth.

Conclusion

Understanding stock options empowers employees to make informed decisions about their compensation packages and potential financial gains. Protecting against misuse ensures fairness and transparency in the workplace, aligning with CAP's mission of advocating for consumer rights and fair practices.