Stock options- Employee stock options

More companies are handing out stock options, and to a much broader group of employees. This lesson gives you vital information on how to handle ESO's.

Employee stock options used to be reserved for the executive suite. No longer. From cash-poor Silicon Valley start-ups to old-line manufacturing and service firms, more and more companies are offering stock options to the rank and file as well.

The National Center for Employee Ownership (NCEO) estimates that employees control at least 10 percent of total U.S. corporate equity, up from about 8 percent just a decade ago, and that employee stock ownership plans account for at least $500 billion. Ten years ago there were only about 1 million workers covered by a few hundred stock option plans. Today there are probably seven times that many employees participating in some 3,000 plans.

Still, management continues to receive the lion's share of stock option grants. Of companies that grant options to more than half their employees, nonmanagement receives 45 percent of total options allocated, on average. At the largest companies, this average is 29 percent. At biotech and computer firms, however, 55 percent of option grants go to nonmanagers.

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