• Employee stock options are offered by companies to their employees as stock compensation plans.

  • These grants are provided in the form of ordinary call options and give the employee the right to buy the company’s shares at a certain price for a limited period of time.
  • ESO may have vesting schedules that limit the ability to play the sport.
  • ESOs are taxed on exercise, and shareholders will be taxed if they sell their shares on the open market.
  • They can have significant time value, even if they have zero or little intrinsic value.