Employee Stock Options - An Incentive for Employees?

More and more often Lithuanian companies face with a problem as to how to attract and retain qualified employees. In order to compete successfully with foreign employers, Lithuanian companies will not merely have to offer their employees competitive remuneration, but make active use of other incentives. One of the most widely used incentives for employees, which could be used by Lithuanian companies, is employee stock options.

A stock option gives the recipient (the "optionee") the right to buy a certain number of shares in the granting company at a fixed price for a certain number of years (e.g., 5 years). When the term comes, the employee will have an option to buy shares or not. Usually, the price at which the employee will be entitled to acquire shares is set at the market price of shares at the time when the options are granted. If at the time of exercising stock options (i.e., at the moment the employee decides to purchase stock pursuant to an option) the market price of