why are stock options offered?

Answer 1

Stocks represent equity of the comapny which in some form can be seen as the total wealth or value of the company. When stock options are offered, it means:

a) It is a benefit offered (typically to valued employees) to now become shareholder of the company

b) Generally stock options are offered at lower price than the market price of the stock. This way, company shares its wealth with valued employees.

c) Stock options are benefits provided by company on top of other regular benefits like salary. This helps company retain and motivate valued employee.

d) Ownership of stock option also indirectly imply that total value of stocks that employee can get will depend on market performance of the company and hence, better he/she performs, more monitory value he/she has chances to get from stock options.