Taking stock: A crash course in employee stock options

This episode explores the concept of employee stock options (ESOs), a form of compensation offering employees the chance to purchase company shares at a fixed price. It distinguishes ESOs from employee stock ownership plans (ESOPs) and defines key terms such as exercise price, vesting schedule, and spread, which determines potential profit. The text also outlines the Canadian regulatory framework for ESOs under the Income Tax Act, emphasizing the roles of stock option plans and agreements. Furthermore, it details the taxation rules for ESOs in Canada, including how taxable benefits are calculated and when they are included as employment income, noting differences between private and public sectors. Finally, the source provides a step-by-step guide for Human Capital Management (HCM) professionals on handling ESO taxation, underscoring their importance in employee attraction and retention.