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Restricted stock awards represent actual ownership of stock and come with conditions on the timing of their sale. An employee benefits from stock options when they buy the stock at the exercise price and then sell it at a higher price.
A stock option award is a type of compensation contract that companies use to incentivize employees. This contract is an agreement between the company and employee that gives them the right, but not the obligation, to purchase shares of company stock at a set price in the future (usually for pennies on the dollar).
A stock grant occurs when a company issues shares of its stock in exchange for non-cash consideration, typically the performance of services. By compensating with stocks, the employer aims to motivate employees to stay at the company and keep them invested in its ongoing success.
Stock options are a benefit often associated with startup companies, which may issue them in order to reward early employees when and if the company goes public. They are awarded by some fast-growing companies as an incentive for employees to work towards growing the value of the company's shares.
The value of the options is typically determined using Black-Scholes or similar valuation formulas, which take into account such factors as the number of years until the option expires, prevailing interest rates, the volatility of the stock price, and the stock's dividend rate.
Option Award Value means the positive difference, if any, between (i) the sum of (A) the product of (I) the number of shares of Common Stock of the Company underlying the options awarded to the Executive under the nonqualified option grant of even date herewith and (II) the VWAP of one share of Common Stock of the ...