Employee stock options used to be a traditional advantage for executives, but now there is a growing tendency among forward-thinking companies to offer them to employees at all levels. In fact, the National Center for Employee Ownership reports that the number of employees holding shares in their company has increased ninefold in just 10 years. Experienced employers have learned that offering stock options to employees is a powerful retention tool, especially in a highly competitive labor market. In addition, it increases employee loyalty and engagement as employees want to see an increase in the value of their stock and now see some control and responsibility in the future success of their business.
The employee stock options program also increases the company’s benefits without significantly increasing the cost of paying employees. For many employees, this can also be a great familiarity with equity ownership. This may encourage some employees to take a greater interest in their pension schemes and gain confidence in investing in additional securities. Employers considering an option program for employees should meet with their financial adviser or lawyer to develop a balanced and legal plan. Some of the details that need to be determined include the number of shares offered, how employees are eligible for the program, future levels of stock options, and whether the program is an integral part of the benefits package.
Since inventory ownership can be a completely new experience for many employees, it is important that all the details of the program be included in the employee’s directory. The Employee Stock Options Program is also a great opportunity for employers to conduct personal financial training or seminars for employees. From the employee’s point of view, they want to understand the exact advantages, procedures and policies of owning shares in their business. For example, they should learn that there are two forms of stock options for employees: unqualified, who can choose the highest percentage of employees, and qualified or stimulating stock options, also called ISO, intended for executives.
Stock options for employees can be of great benefit to them.
However, employers must carefully develop a program that protects their interests and allows employees to be proud of their property and to show pride in productivity and efficiency.