Main Answer:
Raul's ISO grant from BB in 2013 allows him to purchase 8,000 shares of BB stock at $7 per share for 10 years.
Step-by-step explanation:
In 2013, BB granted Raul an incentive stock option (ISO) which gives him the right to purchase 8,000 shares of BB stock at a price of $7 per share. The ISO has a term of 10 years, meaning Raul has the flexibility to exercise his option anytime within that period. At the date of the grant, the BB stock was trading on the AMEX for $6.23 per share.
The incentive stock option is a form of compensation provided by companies to incentivize their employees. It allows employees like Raul to purchase company stock at a predetermined price, often lower than the market value. In this case, Raul has the opportunity to buy BB stock at $7 per share, regardless of its current market price.
The ISO grants Raul the potential for financial gain if the market price of BB stock rises above $7 per share. For example, if the stock price increases to $10 per share, Raul can exercise his ISO and purchase 8,000 shares at $7 per share, allowing him to immediately profit from the difference. However, if the market price falls below $7 per share, Raul may choose not to exercise his ISO as it would be more cost-effective to purchase the stock directly from the market.
Learn more about ISOs:
Incentive stock options (ISOs) are a type of employee stock option that provide certain tax advantages to the employees. They are