We're small and have no intention of selling or going public in the near future. Yet I've been hearing a lot about the advantages of stock options.
Stock options are a key part of compensation in high-tech startups that plan to go public quickly.
But even companies that plan to remain private can use equity to reward and retain employees. After employees exercise their options to buy stock, they can hold it or sell it immediately, pocketing any premium over the exercise price. With publicly traded companies, the market determines the value of a company's shares. Their advantage is that they cost employees nothing in taxes until they exercise them. According to the National Center for Employee Ownership, a nonprofit organization based in Oakland, Calif., companies can issue options in several forms.