• Incentive stock options (ISOs) are popular employee benefits that grant rights to a company’s shares at a reduced price in the future.

  • This type of employee stock purchase plan is designed to retain key employees or managers.
  • ISOs require a vesting period of at least two years and a holding period of more than one year before they can be sold.
  • ISOs often have more favorable income tax treatment than other types of employee share purchase plans.