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An employee stock option is a call option on the common stock of a company, issued as a form of non-cash compensation. Restrictions on the option (such as vesting and limited transferability) attempt to align the holder's interest with those of the business' shareholders. If the company's stock rises, holders of options experience a direct financial benefit. This gives employees an incentive to behave in ways that will boost the company's stock price. Employee stock options are mostly offered to management as part of their executive compensation package. They are also offered to lower staff, especially by businesses that are not yet profitable. They can also be offered to non-employees suppliers, consultants, lawyers and promoters, and to members of the company's board of directors for services rendered. Employee stock options (ESOs) are non-standardized, over the counter options that are issued as a private contract between the employer and employee. Over the course of employment, a company issues vested or non-vested ESOs to an employee which are struck at a particular price - often the company's current stock price. Depending on the vesting schedule and the maturity of the options, the employee may elect to exercise the options at some point, obligating the company to sell the employee its stock at whatever stock price was used as the strike price. At that point, the employee may either sell the stock, or hold on to it in the hope of further price appreciation. Employee stock options have the following differences from standardized, exchange-traded options
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