Employees who receive stock options as incentive pay must exercise the stock options even if the stock price decreases.

Question

Quizplus · Accepted Answer

Employees with stock options have the option (but are not required) to exercise their options to buy company stock at a predetermined price. However, if the stock price decreases, it may no longer be advantageous for the employee to exercise their options and purchase the stock at a higher price than it is currently trading for. Therefore, employees are not required to exercise their stock options if the stock price decreases.

Employees Who Receive Stock Options as Incentive Pay Must Exercise