Steps to selling stock options to employees: some ideas

Written By Steps To Faculty Published May 20th, 2010

There are many ways to sell stock options to employees. Stock options give the employee the right to buy shares of company stock at a specified price once the stock rises to that price or above. Let’s take a look.

Step 1 Talk to your employees

Before establishing a program to sell stock options to employees, determine if the majority of staff members would actually participate in the program. Stock options are a good idea, but can be risky if employees do not engage in these programs.

Step 2 Visit the Securities and Exchange Commission or local state department

Be sure to check out your state department’s policy on issuing stock options to employees. Document procedures and follow the guidelines in detail.

Step 3 Include stock options in packages

Once your firm is cleared to sell stock options to employees, include them in a benefit packages. Although stock options, largely for upper-level employees, some companies in their initial stage offer stock options to all employees, providing incentive to improve the value of the company, which in turn will increase the value of the stock options.. Many times the employees are required to hold the stock for a specified time. Employee stock options are no longer reserved for the executive suite.

Step 4 Check the tax laws

An employee stock option gives your staff the right to buy a certain number of shares of your stock at a stated price in the form of award over a certain period of time. You can sell the stock options in the form of nonqualified stock options or incentives. By selling the stock options to the employees you can get tax benefit. Stock options are still popular among employees; hence, you can easily sell the stock options to the employees. Improper stock options exercising can be a financial headache; therefore, you can sell them to the employees as you can get tax rebate for them.

Remember, stock options are a great way to reward hard working employees, especially when you can’t give your staff cash.


Roger Due

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