Search More:

Please select from the menu above

Nonqualified stock options

Options to purchase company stock that are granted to employees as compensation but do not meet restrictions necessary to qualify as incentive stock options. (See Incentive stock options.) There is no tax consequence when the options are granted but when employees exercise the options to purchase stock, the “spread” or “bargain element”—the difference between purchase price and the stock’s value—is taxed as additional compensation.