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Grant

An award (e.g., money or stock options) issued to key employees. Just like with education, research and other types of grants, the assets given are not expected to be paid back in most cases. Also sometimes referred to as a “stock option plan.”

In the business world, a grant usually comes in the form of shares of stock or options on company stock. It is meant to encourage or reward great job performance and/or to strengthen loyalty to the company. One of the ways a company may encourage loyalty is by vesting the stock options. Access to the financial rewards associated with the stocks grow over time, incentivizes employees to stay with the company. Each company has control over its “vesting schedule,” as well as other aspects of its grant program.

 

EXAMPLE:

An employee works for a large company that offers stock options, but those options are not available until the employee has been there for five years. It will take an additional five years for the employee to take full advantage of the grant.