Compensatory Options

Term Main definition
Compensatory Options

Call options that are primarily awarded to management and key employees, typically awarded by the board of directors or a board compensation committee, pursuant to a stockholder-approved option (or incentive compensation) plan.

The terms and provisions of these options vary, but these options usually become exercisable in installments over a specified period of time (e.g., quarterly over a 3-year period), and the option holder typically must be in the employ of the issuer at the time of exercise. See also ISOs and Non-Qualified Stock Options.