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Employee Stock Options

  1. Vicky Henderson1,
  2. Jia Sun2

Published Online: 15 MAY 2010

DOI: 10.1002/9780470061602.eqf03015

Encyclopedia of Quantitative Finance

Encyclopedia of Quantitative Finance

How to Cite

Henderson, V. and Sun, J. 2010. Employee Stock Options. Encyclopedia of Quantitative Finance. .

Author Information

  1. 1

    University of Oxford, Oxford, UK

  2. 2

    University of Warwick, Coventry, UK

Publication History

  1. Published Online: 15 MAY 2010

Abstract

This article gives a brief introduction to employee stock options. We describe the common features of such options, give statistics on their usage around the world, describe observed exercise patterns, and discuss the literature on modeling exercise behavior, the valuation of employee options, and their cost to the company.

Keywords:

  • employee stock options;
  • compensation;
  • American options;
  • early exercise;
  • Black–Scholes;
  • utility-indifference pricing;
  • incomplete markets