Compensatory stock options

Tax Glossary Definition

Compensatory stock options

Compensatory Stock Options – Compensatory stock options are equity-based incentives granted to employees as part of their remuneration package, allowing them to buy company shares at a fixed (often discounted) price after a specified vesting period. These options align employee interests with company performance and shareholder value.

Example: An employee receives stock options to purchase 1,000 company shares at ₹100 per share after three years of service.

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