The issuance of an award, such as a stock option, to key employees under a stock plan. A stock option grants the employee the right to purchase a certain number of shares of the company's stock at a predetermined price. There is usually a waiting period before an employee can exercise their stock options.

The idea behind stock option grants is to give employees the incentive to align their interests with that of the stockholders. In the past, however, some stock option grants have been set at such low levels that executives ended up enriching themselves, not the shareholders.