[ERSM110010] Securities Options: what are securities options?
When a company grants an employee a securities option, the employee is not given securities outright, but is given the right to acquire them under certain conditions. Sometimes the employee will pay something for the option. A securities option is defined in the legislation (ITEPA03/S420 (8)) as a right to acquire securities. Such a right can be granted over any type of security. The legislation therefore covers more than a ‘share option’, as the term is normally understood.
A share option, as the term is normally understood, will normally set out: -
•the number of shares the employee can buy,
•the price (if any) the employee will pay for those shares,