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You cannot offer stock options to employees in other countries without having a firm grasp of those countries' labor laws. For example, some countries may prohibit certain performance metrics from being considered as part of an equity grant, while others may not allow performance to be considered at all.
Employee stock ownership plans (ESOPs) Employees can choose when to buy shares, usually at a predetermined price; purchasing shares makes the employee a partial owner, or shareholder, of the company. US-based and foreign employees are eligible to participate in an ESOP.
Generally speaking (it depends on the country), an overseas employee of a US company will not receive the tax benefit of an ISO, as most countries tax stock options when exercised. For this reason, US companies are more likely to issue NSOs to foreign employees.
Companies can grant ISOs or NSOs to their employees. However, they cannot grant ISOs to non-employees. Therefore, options granted to contractors/consultants, advisors and non-employee directors - can only be NSOs.
If an employee works for a qualifying U.S. company, they can receive ISOs. However, depending on the tax legislation of the country where the foreign employee resides, they may not receive the tax benefits that U.S. employees receive with ISOs. In this case, NSOs are often a better option for foreign employees.