Question about Stock Options

[stefg]

Hi All,

I know extremely little about shares / options etc so I was hoping I could get some information from some people here.

As I have recently completely my probation period in a new job, the board have approved granting me stock options that were in my contract. The company are sending me some paperwork but I just wanted to know how does this generally work.

They have told me that the options will become vested over a three year period. I have done a little research but I'm little confused by the term 'vested'. When shares are vested, do you need to pay for the shares at the outset or do you only pay for them when the three year period is over?

Thanks,
S

 

[Complainer]

If they are 'stock options' (and not a stock purchase scheme), you shouldn't be paying for them at all - the ideal is that you benefit from them.

An option is the right the buy the share at a point in the future at a fixed price today. Let's say the share is worth €10 today, and goes up to €12 in a year's time.

If you have 100 options that are vested in a year's time, you can buy 100 x €12 shares for a price of 100 x €10 - so you make 100 x €2.

They are liable for tax also.

 

[stefg]

That's great! Thanks for clearing that up, that makes sense.

They are 'stock options' and not a stock purchase scheme so it's welcome news that I don't have to put money forward.

Thanks again!