Employee stock options (ESOs) represent a form of equity-based compensation extended by companies to their employees and executives. Instead of directly bestowing stock shares, the company offers derivative options based on the stock. These options are typically structured as regular call options, affording the employee the privilege to purchase the company’s stock at a predetermined price within a specific timeframe. ESOs serve as incentives to retain and motivate employees, aligning their interests with those of the company by granting them the potential to share in its stock’s future value.
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