Chris Sligh Online

You’ve just been hired for a new job in Palo Alto. Employee stock options are part of your compensation and benefits package. “That’s great,” you think to yourself. “But what are they?”

Employee stock options are an optional benefit that companies can offer their employees. It means that you have to option to purchase stock in the company. If the company does well, the stock rises, and when the stock rises, those who purchased the stock receive financial benefit from it.

Let’s say that in the case of your new job in Palo Alto, employee stock options are offered to all employees. Those that purchase them are motivated to work harder for the benefit of the company. If your hard work benefits the company and the stock rises, then your hard work also benefits you. Companies offer employee stock options as an incentive to do good work. This limits the resentment towards upper management who benefit from lower-level employees’ hard work.

If you treat employee stock options as you would other stocks, it can be a great investment. Consider where the company stock is at the time of your hire, and what differences you can make. If you feel the stock is on the rise, take the option.