Difference Between Stock Grant And Stock Option
Description
How to fill out Stock Option Grants And Exercises And Fiscal Year-End Values?
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FAQ
When the stock options are granted, the total stock option compensation expense is calculated as the fair market value of the stock options x the number of options granted. The company would debit stock option compensation expense and credit ?equity APIC ? stock option?.
Compensation expense is reported based on the stock's fair value (the market value) on the grant date. The shares are fully vested, and the company allocates the compensation expense over the service period, which is presumed to be the current period, unless other requirements are in place.
The grant date for your ISO is the date you are given the shares. The value of the shares on the grant date determines your exercise price. The vesting date is the first date your options become available. The number of options that vest on this date and subsequent dates are subject to the rules of your ISO plan.
A stock grant provides the recipient with value?the corporate stock. By contrast, stock options only offer employees the opportunity to purchase something of value. They can acquire the corporate stock at a set price, but the employees receiving stock options still have to pay for those stocks if they want them.
When you're granted stock options, you have the option to purchase company stock at a specific price before a certain date. Whether you actually purchase the stock is entirely up to you. RSUs, on the other hand, grant you the stock itself once the vesting period is complete. You don't have to purchase it.