Stock options are contractual rights to purchase stock at a certain price. The right typically allows an employee to purchase an amount of stock based on the employee’s continued employment with the company.
Stock plans provide companies with a range of equity instruments that it can offer to employees and consultants. However, the plan should account for (and optimize) certain tax and securities issues. Above all, businesses offering stocks must make sure not to fall under SEC reporting regimes, and should take advantage of favorable IRS treatment through incentivized stocks.
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