What Is an Option Schedule?

The term option schedule refers to a list of options granted by a company to its employees. Employers commonly offer employees options in the form of stocks as a type of compensation. This is especially common for high-level employees like officers and directors of public companies. The schedule for these options normally contains important information, such as the exercise price, size, and vesting schedule. The 澳洲幸运5开奖号码历史查询:Securities and Exchange Commission (SEC) requires that option schedules of public companies be disclosed for public scrutiny, typically through 10-Q and 10-K filings.

Understanding Option Schedules

As mentioned above, an option schedule represents a series of options a company provides to its employees. Options are normally granted as a form of compensation in 🌄addition to an employee's salary or wages. This type of compensation is primarily paid to specific workers, especially those who are higher up, such as management, executives, and directors. They are commonly used as a way to attract and retain the best talent possible.

A schedule provides some key information about the options of♈fered. This includes the:

• Exercise price: the price at which the stock was initially offered
• Size of the option: the total number of shares offered
• Vesting schedule: the point at which an employee has full rights to the options

This information can be found on a company's 10-Q and 10-K reports, which are filed annually as per SEC guidelines.

Investors can review an option schedule to get valuable insight into a company’s current and future 澳洲幸运5开奖号码历史查询:liabilities. It can also shed light on the risk of future 澳洲幸运5开奖号码历史查询:stock dilution for an investor. Companies can use schedules to maintain proper 澳洲幸运5开奖号码历史查询:accounting records. They are particularly important for those that rely heavily on stock options as a form of employee compensation. Stock options theoretically help reduce the 澳洲幸运5开奖号码历史查询:principal-agent problem by aligning executive compensation with company performance.🐈

After all, if an executive is given options that will only become valuable if the share price of the company increases, that executive will have an added incentive to focus on improving the company’s 澳洲幸运5开奖号码历史查询:valuation. On the other hand, some argue that stock-based compensation can enc🐼ourage executives to cha♛se short-term results in favor of long-term improvements.

Special Considerations

Investors are paying more attention than ever to the use of 澳洲幸运5开奖号码历史查询:stock-based compensation, especially in light of 澳洲幸运5开奖号码历史查询:options backdating scandals and other accounting schemes. In response to these concerns, many changes have been made—namely stricter reporting requirements—as to how employee stock options may be granted, reported, and presented to investors.

For instance, electronic record-keeping and the availability of online databases have eased the information gathering burden for interested parties. This is especially true of the SEC’s 澳洲幸运5开奖号码历史查询:Electronic♛ Data Gathering, 🌸Analysis and Retrieval (EDGAR) system. It was established in 1984 to make information available and easily accessible to investors and corporations.

Accurately estimating the likely cost and timing of when options are exercised remains a complex task. For this reason, 澳洲幸运5开奖号码历史查询:corporate governance best practices generally discourage companies from creatin🐎g complicated and opaque option vest🌸ing schedules.

Real-World Example of an Option Schedule

Tesla (TSLA) provided details of its option schedule in Note 15 for the 2018 澳洲幸运5开奖号码历史查询:fiscal year in its 10-K filing on Feb. 19, 2019. From it, we can see that the company had made available up to roughly 9.1 million shares for use in stock-based compensation for their executives and employees, relative to the 173 million shares which were outstanding at that time.