Stock-Based Compensation
Compensating Employees with Equity
Many companies compensate employees using stock options, restricted stock, or other equity awards. The fair value of these awards is measured at the grant date and recognized as compensation expense over the required service or vesting period.
Note
Expense recognition is based on fair value at the grant date rather than the future stock price.
Summary
Stock-based compensation recognizes employee services using the fair value of equity awards.