Companies in present competitive times are faced with an uphill task of retaining talent and motivating the employees inducing them to align their interest and efforts with the long term goals of the organization. Stock options issuance has come to play an instrumental role in achieving this goal of the companies wherein the employees are awarded with stocks of their company and made a part and parcel of the company.
The employee is then automatically motivated to give his best performance and contribute to the long term goals positively as he feels empowered by the stock options issuance and owning an interest in the company. Companies while issuing stock options to the employees generally create a vesting period which in other words means a gestation period post which the stock options come into force. Stock options may also be used to retain senior management and key employees in case of specific events such as merger and acquisitions or till the completion of some important big ticket projects.
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