What are incentive stock options?

Incentive stock options (ISOs) are popular measures of employee compensation received as rights to company stock. These are a particular type of employee stock purchase plan intended to retain key employees or managers. ISOs often have more favorable tax treatment than other types of employee stock purchase plan.

What are incentive stock options (ISOs)?

Here's an explanation for Incentive stock options (ISOs) are a type of employee stock option that can provide tax benefits for both the employer and the employee. ISOs are often used as a component of a compensation package to help with employee retention. ISOs are also used to compensate certain highly-valued employees.

Are incentive stock options vested?

Keep in mind most ISOs come with a vesting period, meaning you may be granted the ISOs on a certain date, but you won’t be eligible to exercise the options until you’re vested, which in some cases takes years. What are the disadvantages of incentive stock options? While ISOs offer potential benefits, there are several drawbacks.