Who may receive income upon exercising a stock option?

When an employee exercises a stock option, they have the right to purchase shares of stock at a predetermined price, known as the exercise or strike price. This option is typically granted as part of an employee compensation package to incentivize performance and retention. Therefore, the individual who utilizes the option and actually acquires the stock is the employee.

The process is specifically designed for individuals who are granted these options in connection with their employment. While the employer may provide options and the grantor may formally issue them, it is the employee who exercises the option to buy shares and potentially realize income upon their sale or appreciation in value. This makes it clear that the income from exercising the option pertains to the employee who takes action to utilize those options, distinguishing them from other parties who may have no direct involvement in that specific transaction.