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Restricted stock awards represent actual ownership of stock and come with conditions on the timing of their sale. An employee benefits from stock options when they buy the stock at the exercise price and then sell it at a higher price.
Share-option schemes A share option is the right to buy a certain number of shares at a fixed price, some period of time in the future, within a company. Employees can generally exercise their share options - ie buy the shares - after a specified period, known as the vesting period.
An employee stock option is the right given to you by your employer to buy ("exercise") a certain number of shares of company stock at a pre-set price (the "grant," "strike" or "exercise" price) over a certain period of time (the "exercise period").
An employee stock ownership plan (ESOP) is an employee benefit plan that gives workers ownership interest in the company; this interest takes the form of shares of stock. ESOPs give the sponsoring companythe selling shareholderand participants various tax benefits, making them qualified plans.
Companies award stock options to recruit and retain key employees, executives and directors. These options give holders the right to buy the underlying shares at predetermined prices, known as strike prices, before specified expiration dates.
Stock options are usually granted for a specific period (option term) and must be exercised within that period. A common option term is 10 years, after which, the option expires. While time-based vesting remains popular, companies are increasingly granting equity that vests upon meeting certain performance criteria.
With a stock award, you receive the company's stocks as compensation. Depending on the type of stock, you may have to wait for a certain period before you can fully own it. A stock option, on the other hand, only gives you the right to buy the company's stocks in the future at a certain price.
Stock Awards means any rights granted by the Company to Executive with respect to the common stock of the Company, including, without limitation, stock options, stock appreciation rights, restricted stock, stock bonuses and restricted stock units.
From the employee's standpoint, a stock option grant is an opportunity to purchase stock in the company for which they work. Typically, the grant price is set as the market price at the time the grant is offered.