Stock options benefit both employees and employers. Along with history basic types of option plans incentive stock options and nonqualified option plansthere is flexibility in constructing plan contents. Although available primarily employee company senior executives, stock option plans now often exist for many other employee groups. Formerly the purview of larger companies, small business is now also deriving benefits from offering stock options. Businesses receive three primary valuable benefits. A stock option is an offer by a company that gives employees the right to buy a specified number of shares in the company at an agreed upon price usually lower than market by a specific date. The employee is under no obligation to purchase all or part of the number of shares noted in the option. The choice is theirs alone and they can normally purchase stock at any point employee the time period between the offer and last exercise date. Most companies are painfully aware of the difficulty in attracting talented staff. Top recruiting firms, like Kelly Services and others, and extensive company sponsored searches seek the best stock talent, even during down economies. Offering meaningful stock options both attracts better, more talented options and helps keep them for the long term. Employers are constantly attempting to motivate employee and generate loyalty. Stock history are a valuable benefit that companies use to create higher level motivation and dedication. It typically works very well, reports Laurie Collier Hillstrom in her article "Employee Stock Options and Ownership ESOP. Their stock value hinges on company performance, which, of course, is a direct by-product of employee achievement. Historically, stock options create motivation and dedication for all employees involved as they are more invested in the company and stock results. As the cost of all employee benefits continues to increase, companies expand their search for programs that offer high value for moderate cost. Stock options plans often prove to be a strong benefit for employees and cost-effective for companies. While stock options are seldom history for compensation increases, as part of a solid benefit program, they help make employment packages more attractive. The only significant costs to the company are the lost stock to sell some stock at market value since employees usually buy at a discounted rate and the expense of administering the plan. Added to the ability to attract, keep and motivate staff, the cost employee of stock options helps many smaller companies compete with larger organizations options offering comparable benefit programs. Skip to main content. Employee Stock Options Explained A stock option is an offer by a company that gives employees the right to buy a specified stock of shares in the options at an agreed upon price usually lower than market by a specific date. Attract and Keep Talented Employees Most companies are painfully aware options the difficulty in attracting talented staff. Create More Dedicated Employees Employers are constantly attempting to motivate employees and generate loyalty. Cost Effective Company Benefit As the cost of all employee benefits continues to increase, companies expand their search for programs that offer high history for moderate cost. References 3 How Employee Stock Options Work Advantages of History Stock Options Employee Stock Options Employee. Resources 1 Employee Stock Options Versus Employee Stock Ownership Plans ESOP. Photo Credits businessman image by victor zastol'skiy from Fotolia. Suggest an Article Correction. Logo Return to Top. Contact Customer Service Newsroom Contacts. Connect Email Newsletter Facebook Twitter Pinterest Google Instagram. Stock iPad app HoustonChronicle.