Employee Stock Options Explained | The Terms You Need To Know!

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Today we're going to talk about employee stock option plans.
I'm going to break down what the difference is between options and shares. We're also going to cover off what they are, why they're useful, and what are the main mechanics in setting up an employee stock option plan.

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#SteveParr #ParrBusinessLaw

[parrbusinesslaw]

Did this video answer all your questions? Please feel free to contact me directly or leave a comment below!

[memeshekels]

I like how detailed this was explained compared to the other vids I watch so far

[DangerousTheDreamCatcher]

Thank you for the insight Ryan Reynolds!

[danielo]

Hello,

Thanks for making this video :)

I was awarded stock options with a 5 year vesting period in a company that is still private. This award was for contract work done over a finite period in the company's early days. I have not worked for the company since the award was made and 81.25% of my options are vested. I do not know much about the companies finances, and I don't know if I can turn my vested options into cash while the company is still private. Generally is someone like me supposed to have insider information about the company's financial stature in order to decide when to exercise the shares? Is the company supposed to offer me information, like when an IPO may happen?

[shankare]

Thank you for making it simple to understand. I just have a doubt regarding the taxation part of the ESOPs. So you mentioned that they can be taxed when they are vested. And that depending on the rules the tax can also be filed at the time of selling the shares instead of the point in time when they were vested. But I guess, and think, and feel, unless the tax rate changes, the person is going to be paying the same amount of tax overall

[minalshah]

Hi steve, very well explained. are there any specific compliances to be done when ESOP pool is created?? for a private corporation?? any filings needs to be done???

[ss]

Can you do it from the employee point of view? i.e. what should you look out for in the T&Cs, how do you know if it's a good plan? What happens once you've decided you want to exercise your options? what happens if you leave before the vesting period is over etc.

[PoonamSharma-xzbd]

Such a great platform is YouTube, and YouTubers are the best people..
I am working on my homework. Thanks for clarification.

[tylerfriend]

Great video thank you - general question: if you are thinking about leaving the company. Doo you need to wait for an equity event to occur? or can you exercise your options if you are fully vested based on current valuation of the company? Thx.

[rkmn]

In my contract I have an amount
Stock options: 500k JPY
Vesting over 4 years: 15%, 35%, 65%, 100%

100 shares (1 trading unit) = 1 stock option = 1 JPY

does this mean I will get 500, 000/100 or 5000 shares of the company stock that will vest over 4 years?

[doona]

I am leaving my company I have 60% vested in my ESOP account. What are my options?

[williamsja]

Calling a stock option plan an ESOP is misleading. An ESOP is an Employee Stock Ownership Plan which is a Qualified retirement plan whereas a stock option plan is a non-qualified synthetic equity. An ESOP holds actual shares and the employees ARE actually owners and they can get beneficial tax treatment on their distributions in the future. An option plan is taxable upon exercise. I feel like you are talking about benefits of an ESOP (ownership and culture) but referring to an option plan and this is misleading. Option plans usually only apply to certain individuals whereas an ESOP will apply to most of the employees of the entire company.

[mvtghcc]

Hello, I received and offer letter saying they offer me “500 stock options” What does this mean? What do I do with this stock option? Thank you!

[eloipecquet]

In this scénario, is the 199$ considered capital gain or regular income ?

[donniethesportsguy]

Can you explain what the expiration date? Like if you let the expiration date pass you could forfeit or cash out if you do it in before expiration date?

[Dez]

I'm a mid level sales manager, my colleague is also a sales manager in a diffferent division. He just gave notice and I know the company is going to ask me to pick up the slack. I want a raise if that happens however I dont need one. I was just thinking could the company gove me stock options instead?

[wjm]

is the stock option $ taken from employee's paycheck?

[bartpinkeye]

If you have a stock discount, how do you make money on that?

[alexmoss]

Steve -- Noting that the term ESOP in the U.S. has a very specific meaning that is quite different from how you are using it i.e. how the term is used in Canada. U.S. ESOPs, of which there are many 1, 000s, are not this structure at all, they are Employee Stock *Ownership* Plans, a type of retirement plan and not a form of stock *option*. Neither one is necessarily better, simply that they use the same term to describe wholly different equity sharing tools. It's (yet another ) very interesting comparison between our two national approaches. Thanks for your insight here, very helpful to hear.

[skaura]

Is this correct: after the options have vested, is an employee able to exercise those options any time before the expiration date and purchase the stock at the strike price? And therefore sell those options at the higher price, also when they choose? If so, wouldn't someone exercise options as soon as they have vested? I don't see why they wouldn't