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Compensatory Options

Compensatory Options

  • Term

    Main definition

  • Compensatory Options

    Call options that are primarily awarded to management and key employees, typically awarded by the board of directors or a board compensation committee, pursuant to a stockholder-approved option (or incentive compensation) plan.

    The terms and provisions of these options vary, but these options usually become exercisable in installments over a specified period of time (e.g., quarterly over a 3-year period), and the option holder typically must be in the employ of the issuer at the time of exercise. See also ISOs and Non-Qualified Stock Options.

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