Incentive Stock Option Definition: An incentive stock option, also known as an ISO, is a benefit provided by a corporation that allows employees to buy shares in a company, usually at a reduced price.
It’s a benefit that gives employees a vested interest in a company’s performance while allowing them to enjoy tax breaks. In most corporations, a company may provide ISO benefits to employees in management positions or executives.
Incentive stock options are often helpful in retaining top qualified managers and key employees. ISOs also give investors a sense of ownership and offer favorable tax options for most people.
These benefits are usually presented alongside competitive salaries, bonuses, and other incentives.
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