How Stock Options Work

Employee stock-option programs are typically authorized by a

company's board of directors (and have historically been approved

by the shareholders) and give the company discretion to award

options to employees equal to a certain percentage of the company's

shares outstanding.

Options give employees the right to buy a certain number of their

company's shares at a fixed price for a certain period of time, usually

10 years.

That price, usually the market price of the stock on the date the