Well it is a known fact that in hard times and financial meltdowns, it becomes difficult to give a riase to the employees. However it is less cumbersome on the part of the company if they agree to give a stock option to their employees.
The benefits accrued to a company on giving stock options to employees are as following:
- Stock options are a form of compensation to keep the nerves of the employees cool.
- Stock options are not worth anything unless the share price appreciates from the date they were granted, thus it encourage good employee performance.
- Options typically don't vest for several years after the grant date, they also encourage loyalty among the employees as they would like to stick to the company to encash those options.
Thus granting stock options is a win-win situation for a company and of course it keeps employees also satisfied which means higher productivity and more profit.
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