The term stock compensation plans refers to a variety of programs that provide a select group of employees with the opportunity to share in the ownership of the company. Compensable stock option plans typically grant employees the right to purchase shares of common stock at an attractive price, or receive stock as part of a performance incentive plan.
Unlike stock purchase plans, which are considered non-compensatory and provide employees with the ability to purchase shares of the company's common stock at a discount, stock compensation plans are typically provided to a select group of employees the company desires to retain.
Generally, these plans fall into one of the following four categories:
The income tax implications will vary by plan type, and are discussed in more detail in the documents cited immediately below.
common stock, stock warrants, employee stock purchase plans, stock option plans, stock grants, Section 83(b) election, common stock equivalent, contingent issuance agreement, appreciation and phantom rights, verifying compensation