The Tennessee Stock Option Plan for Federal Savings Associations is a program designed to provide financial incentives to employees of Federal Savings Associations (FSA's) in Tennessee. It offers employees the opportunity to purchase company stock at a predetermined price, known as the exercise price, within a specified time frame called the exercise period. This stock option plan is an important component of employee compensation and benefits, as it aligns the interests of employees with the overall success and growth of the FSA. Employees who participate in the stock option plan have the potential to profit from the increase in the market value of company stock, thereby creating a sense of ownership and motivation among the workforce. The Tennessee Stock Option Plan for Federal Savings Associations consists of several types of stock options, including: 1. Incentive Stock Options (SOS): These options are typically available to key employees and provide preferential tax treatment. SOS have strict eligibility requirements and must meet specific holding periods to qualify for long-term capital gains tax rates upon exercise and sale of the stock. 2. Non-Qualified Stock Options (SOS): Unlike SOS, SOS do not have the same strict eligibility requirements or preferential tax treatment. They are available to a broader range of employees and allow for flexibility in terms of exercise and sale timing. 3. Restricted Stock Units (RSS): RSS are not technically options but are often included in stock option plans. They represent a promise to deliver company stock to employees at a future date or upon meeting certain vesting conditions. RSS are subject to income tax upon vesting, and employees receive the shares outright instead of having the option to purchase them at a specific price. 4. Performance Stock Options: These options are tied to specific performance goals or metrics set by the FSA. If the predetermined performance targets are met, employees can exercise these options. This type of stock option plan encourages employees to strive for organizational growth and success while rewarding their individual contributions. By implementing the Tennessee Stock Option Plan for Federal Savings Associations, FSA's in Tennessee can attract and retain top talent, motivate their workforce, and foster a sense of loyalty and commitment. It allows employees to share in the success of the company, thereby creating a mutually beneficial relationship and driving long-term value for both the FSA and its employees.