Abstract

It helps to remember that employee options and market-traded options are quite different. The difference between them makes valuing employee options more complicated, but it also offers a lesson about how the employer's cost for a given piece of the total rewards package may not be the same as its value to a given employee. Organizations too often miss this and, as a result, can find themselves leaving money on the table. A stock option is the right to buy a share of stock at a specific price (called the strike or exercise price) at some point in the future. A market-traded option can be bought and sold in open markets (just like actual stock or commodities).

Document Type

Article

Publication Date

3-2013

Publisher Statement

Contents © 2013. Reprinted with permission from WorldatWork. Content is licensed for use by purchaser only. No part of this article may be reproduced, excerpted or redistributed in any form without express written permission from WorldatWork.

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