Employee stock options: All you need to know about owning stocks in the company you work at

So, you’ve just gone for an interview for a position at a startup, SME or tech company, and they’re offering you the chance to receive employee stock options as part of your package.

ESOPs, however, are not shares. They are unvested stock options. This is a promise to offer you the right to purchase a certain amount of shares, usually upon fulfilling certain conditions, such as working for the company for a certain amount of time. When you fulfil these conditions, you will finally be able to exercise the option and purchase the stocks — that is, they go from unvested to vested.

Another thing to look out for is the vesting schedule. If the company expects you to work there for many years in order to vest the ESOPs, it might not be worth your while. When you quit, you lose your rights to any unvested ESOPs.

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