Stock Options for Employees

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It immediately transfers ownership of company stock to the employee.
It grants an employee the right to purchase company shares at a specific price. (correct)
It forces the employee to purchase the company's stock.
It obligates an employee to sell their shares back to the company at a predetermined price.

To discourage employee 'buy-in' of ownership.
To decrease the company's tax liability.
To align employee interests with company performance and foster a sense of ownership. (correct)
To reduce employee salaries without affecting morale.

In the year the employee disposes of (sells) the shares purchased through the option.
In the year the options are granted to the employee.
In the year the employee exercises the options and purchases the shares. (correct)
In the year the employee becomes eligible for retirement.

<p>2025, the year the shares were disposed of. (C)</p> Signup and view all the answers

<p>The price at which the employee is entitled to purchase shares. (B)</p> Signup and view all the answers

A contract allowing an employee to buy shares at a set price.

The specific price at which an employee can purchase shares.

The income an employee gains when exercising stock options.

Employees include stock option benefits in income when they buy shares.

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Employees of a CCPC can defer income until they sell shares.

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Stock options allow company employees to buy a predetermined number of company shares at a fixed price (option price).
Companies often offer stock options as part of employee compensation.
Offering stock options encourages employee investment and ownership involvement.
Stock option benefits are considered employment income.
For publicly traded companies, the stock option benefit is recognized in the year the employee exercises the option (buys the shares).
Employees of a Canadian-controlled private corporation (CCPC) can delay recognizing the stock option benefit until the year they sell (dispose) of the shares.