Employee stock options can be an extraordinary wealth builder.
If you’re a woman executive, it’s extremely important for you to understand the power of owning equity in a company and its ability to create great wealth. According to The Carta Study, women own just 47 cents for every dollar that a man owns in equity. Stock options give you the right to purchase your company’s stock for a set price at a future date during a specified buying window. The company’s board sets the exercise price based on the fair market value.
Whether you’re a leader at a start-up or a senior executive in a Fortune 500 company, you should negotiate stock options as part of your overall compensation package. Stock options or shares are awarded not only to employees, but also to directors, advisors and consultants. They’re an extremely popular method of attracting, motivating, and retaining talent, and a way for a company to dispense rewards without having to pay out cash.
How Stock Options Work
Don’t leave any compensation considerations on the table. The benefits of stock options can completely change the financial legacy for a woman and her family. Here’s how they work:
A company hires you. As part of your employment package, you negotiate that the company will grant you stock options to purchase 10,000 shares of its common stock at $1 per share. This is the company’s current share market value as of the date options are given to you.
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