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Social and Behavioral Sciences
Economics Faculty Publications
Valuation; Stock options; Employee stock ownership plans--ESOP; Options trading
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Full-Text Articles in Labor Relations
Valuing Employee Stock Options, Kevin F. Hallock
Valuing Employee Stock Options, Kevin F. Hallock
Economics Faculty Publications
It helps to remember that employee options and market-traded options are quite different. The difference between them makes valuing employee options more complicated, but it also offers a lesson about how the employer's cost for a given piece of the total rewards package may not be the same as its value to a given employee. Organizations too often miss this and, as a result, can find themselves leaving money on the table. A stock option is the right to buy a share of stock at a specific price (called the strike or exercise price) at some point in the future. …