share option: meaning, definition, pronunciation and examples
LowFormal / Business / Financial
Quick answer
What does “share option” mean?
A right granted to an employee to buy a specified number of shares in their company's stock at a predetermined price within a certain period of time.
Audio
Pronunciation
Definition
Meaning and Definition
A right granted to an employee to buy a specified number of shares in their company's stock at a predetermined price within a certain period of time.
More broadly, any contractual right to purchase shares at a set price, used as a component of executive compensation or incentive schemes to align interests with shareholders.
Dialectal Variation
British vs American Usage
Differences
No significant difference in meaning. The term is standard in international finance. Spelling conventions follow national norms (e.g., 'exercising' an option).
Connotations
Neutral corporate/financial term in both regions. In the UK, may be associated with broader employee ownership schemes. In the US, strongly associated with executive compensation.
Frequency
Equally common in both varieties within the specific domains of corporate governance, human resources, and finance.
Grammar
How to Use “share option” in a Sentence
The board granted [RECIPIENT] a share option.She exercised her share option [TIME PHRASE].The scheme offers share options [BENEFICIARY PHRASE].Vocabulary
Collocations
Examples
Examples of “share option” in a Sentence
verb
British English
- The directors were share-optioned as part of their package.
- The scheme share-options employees after three years.
American English
- The executives were stock-optioned heavily.
- The plan stock-options key talent.
adjective
British English
- The share-option scheme was very attractive.
- He received a share-option grant.
American English
- The stock-option package was substantial.
- It's a stock-option incentive plan.
Usage
Meaning in Context
Business
The remuneration committee approved a new share option plan for senior executives to drive long-term performance.
Academic
The study examined the correlation between the dilution effect of share option schemes and shareholder returns.
Everyday
My new job comes with a salary and some share options, which could be worth a lot if the company does well.
Technical
The accounting treatment requires the fair value of the share option to be expensed over the vesting period using a binomial model.
Vocabulary
Synonyms of “share option”
Strong
Neutral
Weak
Vocabulary
Antonyms of “share option”
Watch out
Common Mistakes When Using “share option”
- Using 'share option' to refer to buying shares on the open market (correct: 'buying shares').
- Confusing 'share option' with 'share' itself (an option is a right to buy, not ownership).
- Incorrect plural: 'shares options' (correct: 'share options').
FAQ
Frequently Asked Questions
No. A share option is a right to *buy* a share at a set price in the future. You only own the share after you 'exercise' the option and pay the money.
Vesting is the process by which an employee earns the right to exercise their share options, typically after working for a certain period (e.g., 4 years). Unvested options are usually forfeited if you leave the company.
The option is said to be 'underwater' or 'out of the money.' It has no immediate value because you could buy the share more cheaply on the open market. The option may expire worthless if the price doesn't recover.
In essence, yes. 'Share option' is the common term in British English, while 'stock option' is preferred in American English. They refer to the same financial instrument.
A right granted to an employee to buy a specified number of shares in their company's stock at a predetermined price within a certain period of time.
Share option is usually formal / business / financial in register.
Share option: in British English it is pronounced /ˈʃeər ˌɒp.ʃən/, and in American English it is pronounced /ˈʃer ˌɑːp.ʃən/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “Golden handcuffs (when share options are used as a retention tool)”
- “Underwater option (when the market price is below the exercise price)”
Learning
Memory Aids
Mnemonic
Think of a SHARE OPTION as a ticket (OPTION) that gives you the future right to buy a piece (SHARE) of the company at today's price.
Conceptual Metaphor
INCENTIVE AS A KEY (A share option is a key that can unlock future wealth if the company's value grows).
Practice
Quiz
What is the primary purpose of a share option in an employment context?