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Chapter 4. Employee Recruitment and Comp... > Granting Options to Employees

Granting Options to Employees

Introduction

In recent years, option rewarding has become an important component in compensation packages. Many companies establish their positions among other high tech companies from the point of view of employee recruitment by structuring generous and promising packages for their employees. Due to the high demand for employees in recent years, many companies offer to remunerate employees who bring new employees to the company, and in many cases this incentive too takes the form of options.

Currently, a significant proportion of employees in almost every high tech company holds options, and almost every company has a stock option plan for the company's employees and consultants, typically in the range of 20–30% of shareholders' equity. This form of compensation increases the alignment of interests between the employee and the company and creates a long-term bond between the employee and the company, the length of which depends on the number and vesting periods of the options. In addition, the allotment of options enables the company to save precious cash that is needed for the company's current operations.


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