Stock Options vs. Stock Purchase Programs

Injury, death, and employment cases frequently involve a plaintiff who has lost out on the value of company stocks that could have been purchased. Generally, the calculation of the number and the amount of company stocks is fairly straightforward. However the value of the lost shares is not as straightforward. The calculation of the value of the lost shares typically involves the use of sophisticated mathematical models such as the Black-Scholes model.

Here are the typical types of plans that the injured or deceased plaintiff could have had:

Employee Stock Option Plans:

Stock options plans give the employee the ability to purchase a specific number of shares of a company's stock at a future date at a pre-set price. Options are typically granted for a certain period of time. If individuals do not exercise the options before the end of the period, they expire and are forfeited. Also they must exercise them usually within 3 months of leaving the company. Note that until the individual exercises the option, they are not the owner of the stock.

Employee Stock Purchase Programs:

Stock purchase programs give the employee the ability to purchase a quantity of shares of a company’s stock within a certain time period at a discounted price of 10-15%. Employees typically use payroll deduction to purchase stock in a stock purchase program. These purchases must happen within the allotted time and the individual becomes the owner of the stock at purchase.