Stock options refer to a contractual right of a recipient to purchase stock in a startup a predetermined exercise price. Stock options are a commonly used form of compensatory equity to incentivize employees and other service providers in early stage startups, given that startups can rarely afford to pay market salaries to their service providers.
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Stock Options: ISOs vs. NSOs
What may seem like a bland choice (whether to grant ISOs or NSOs) can have massive tax implications down the road for startup employees and contractors.
