Question

Typically stock options are exercisable

a.several years after the grant date.
b.at the end of an employee's employment.
c.immediately.

Answer 1

The correct answer is option a. Typically, stock options are exercisable several years after the grant date. This waiting period incentivizes employees to stay with the company and contribute to its long-term success.

Step-by-step explanation:

Typically, stock options are exercisable a. several years after the grant date. This means that employees must wait for a specific period of time before they can exercise their stock options. The purpose of this waiting period is to incentivize employees to stay with the company and contribute to its long-term success.

By granting stock options with a vesting period, companies are able to reward employees for their loyalty and service. The vesting period is typically structured in a way that allows for incremental exercise of stock options over time. For example, an employee may be able to exercise 25% of their options after one year, 50% after two years, and so on.

Once the vesting period has ended, employees are free to exercise their stock options. This means that they can purchase the specified number of shares at the predetermined strike price, which is usually set at the market price on the grant date.

Answer 2

Stock options are typically exercisable several years after the grant date, during a period known as the vesting period, to encourage long-term employment. Immediate exercise or at the end of employment are less common scenarios.

Step-by-step explanation:

The subject of the question is whether stock options are typically exercisable immediately, at the end of an employee's employment, or several years after the grant date. Stock options are a form of employee compensation that gives the holder the right to buy company stock at a predetermined price, known as the exercise or strike price.

Typically, stock options are exercisable several years after the grant date, a period known as the vesting period. The vesting period is designed to encourage employees to remain with the company for a longer period of time and contribute to its success. Once the options are vested, employees can exercise their options to purchase stock at the strike price, which is often lower than the current market value, until the options expire. Options are not commonly exercisable immediately or at the end of employment; though the latter may be true if the vesting period coincides with the end of the employment or if the company has special provisions for termination of employment.