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Life
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ESOPs
ESOP terminology made easy
Employee stock purchase plan: Participants in this type of plan are often able to purchase stock at a discounted price (usually at a 15 per cent discount).
Exercise price: Also called the strike price, it is the price at which a holder of stock options is able to purchase the stock.
Going public: Also called as IPO. A company goes public when it makes the transition from being privately held (owned by individuals and private funds such as venture capital funds), to offering its first group of stocks for sale on a common market (via a stock exchange). At this time, the value of the company — and its employees' options — often increases substantially, and the company's financial performance becomes accountable to the expectations of the entire market.
Grant price: The market price of a stock at the time the employee is granted an option. The employee may pay less than this amount if the exercise price is at a discount from the grant price.
Incentive stock option: It's available only to employees of a company. With this type of option, income is reported only when the stock is sold, not when the option is received or exercised. If the stock is held long enough, the employee may report long-term capital gains instead of compensation income, which could offer a significant tax saving.
Spread: The difference between the current market value of a stock and the strike price.
(Source: salary.com)
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