Assume on 1/1/2019 you are issued employee stock options that provide you the right to buy 1,000 shares of Widget at a price of $10.00 a share.

If an employee working for company XYZ gets an option on 100 XYZ shares at $10 and XYZ's stock price goes up to $20, the employee can exercise the option and buy the 100 XYZ shares at the $10 strike price, sell them on the market for $20 each, and pocket the $1,000 difference ($2,000 - $1,000 = $1,000). Employee stock option plan (ESOP) is an “option” granted to the company employee carries the right, but not the obligation, to buy a promised number of shares at a … In this case, the employee has to pay 10$ because of the option and receive 20$ because of the exit. Bear in mind that in some geographies the employee might be required to pay taxes on the capital gain of the stock option. To understand how a typical employee stock option plan works, let’s look at an example. Therefore, he/she will receive the net value of 10$. Employee Stock Option - ESO: An employee stock option (ESO) is a stock option granted to specified employees of a company. An employee stock ownership plan (ESOP) is an employee benefit plan that gives workers ownership interest in the company.

employee stock option plan example