Backdating refers to the practice of marking a document, check, or other financial instruments with a date that precedes the actual date. It is often used in accounting, finance, and legal contexts.
Compensatory stock options are financial instruments provided to employees as partial compensation for their services, commonly used by firms to align employee interests with those of shareholders.
Dilution refers to the reduction in earnings per share (EPS) and book value per share that occurs when convertible securities, such as convertible bonds and preferred shares, or warrants and stock options, are converted into common stock.
An Employee Stock Ownership Plan (ESOP) is an employee benefit plan that gives workers ownership interest in the company. Through ESOPs, companies provide their employees with stock ownership, often at no upfront cost to the employees. ESOPs are used by a broad variety of publicly traded and closely held companies.
Enterprise Management Incentives (EMIs) are a type of employee stock option scheme that provides tax advantages to both employees and employers in the United Kingdom.
A European Option is a type of financial derivative that can only be exercised on its expiration date, unlike American options, which can be exercised at any time before expiration.
An approved share option scheme that entitles a specified class of directors or employees to purchase shares in the company in which they are employed.
A figure showing earnings per common share after assuming the exercise of all outstanding warrants and stock options, and the conversion of convertible bonds and preferred stock, all potentially dilutive securities.
An Incentive Stock Option (ISO) is an equity-type compensation plan where qualifying stock options are free of tax at the date of grant and the date of exercise but are taxed when sold.
An optionee is an individual or entity that receives or purchases an option, which grants them the right, but not the obligation, to buy or sell an asset at a predetermined price within a specified time period.
A put option is a financial contract that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.
An agreement in the USA that allows employees to purchase company stock at a future date at a specified price, often lower than the market price, and meeting the IRS's requirements.
A share incentive scheme is a program designed to reward employees with company shares upon reaching certain performance targets, fostering ownership and motivation within the workforce.
A share option is a benefit often offered to employees that provides them the opportunity to purchase company shares at a favorable fixed price or discounted market rate. This guide explores the definition, examples, FAQs, related terms, and additional resources.
An approved share option scheme established by an employer for the benefit of executives or other employees. HM Customs and Revenue has detailed rules regarding the income tax and capital gains tax chargeable to individuals benefiting from such a scheme.
Time value refers to the premium placed on the time an investor has to wait until an investment matures, using calculations such as the Present Value (PV). It applies to general investments as well as specific instruments like stock options.
