Which of the following statements related to employee stock options (ESO)are generally correct?
I. ESO vesting encourages long-term employment.
II. Most ESOs are issued at the money.
III. ESOs cannot be resold.
IV. ESOs that are in the money are frequently repriced.
A)I and II only
B)I and IV only
C)II and III only
D)I, II, and III only
E)I, II, III, and IV

Question

Quizplus · Accepted Answer

I. ESO vesting is designed to encourage long-term employment by providing an incentive to stay with the company until the options vest. II. Most ESOs are indeed issued at the money, meaning the exercise price is set to the stock's current market price. III. ESOs typically cannot be resold or transferred, making them different from publicly traded options. IV is incorrect because repricing ESOs that are in the money (worth more than the exercise price) is not a common practice; repricing usually occurs when options are underwater (worth less than the exercise price) to retain employees.

Which of the Following Statements Related to Employee Stock Options