stock-option

Vocabulary Word

Definition

'Stock-option' grants the right (but not the obligation) to buy a company's shares at a set price within a specified timeframe. Imagine it as a 'reserve now, buy later' deal on a company's ownership.

Examples in Different Contexts

In corporate strategy, stock options can be used as a tool for aligning the interests of employees with those of shareholders. A CEO might state, 'By granting stock options, we motivate our team to focus on long-term value creation, aligning their goals with our shareholders.'

Practice Scenarios

Business

Scenario:

With our annual review approaching, we should consider revising our staff remuneration packages, perhaps something more creative than just an annual bonus.

Response:

Including stock-options as part of the compensation package could be a great way to motivate the team.

Tech

Scenario:

Securing high-quality talent on board for our start-up, considering our limited budget, is proving to be challenging.

Response:

Perhaps we can offer prospective employees stock-options, as an incentive to join us. It also reflects faith in our future growth.