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Answer Posted / pooja shah
An employee stock option is a call option on the common
stock of a company, issued as a form of non-cash
compensation. Restrictions on the option (such as vesting
and limited transferability) attempt to align the holder's
interest with those of the business' shareholders. If the
company's stock rises, holders of options generally
experience a direct financial benefit. This gives employees
an incentive to behave in ways that will boost the
company's stock price.
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