What is 'exercise price' in SAP PA-CM - Compensation Management?

exercise price - Overview

• Component: PA-CM

• Component Name: Compensation Management

• Description: Price for which an employee can buy the base value, usually enterprise share, when he or she exercises granted stock options.

exercise price - Details

• 
  Key Concepts: 
  Exercise price is a term used in SAP Compensation Management (PA-CM) to refer to the price of a stock option at which it can be exercised. It is the price at which the option holder can purchase or sell the underlying asset. The exercise price is determined at the time of grant and is usually equal to the market price of the underlying asset at that time. 
  
  How to use it: 
  In SAP Compensation Management, exercise price is used to determine the value of a stock option. The exercise price is set when the option is granted and cannot be changed afterwards. The value of the option is calculated by subtracting the exercise price from the current market price of the underlying asset. 
  
  Tips & Tricks: 
  When setting an exercise price, it is important to consider the current market conditions and any potential changes that may occur in the future. This will help ensure that the option holder will be able to benefit from any potential increase in value of the underlying asset. 
  
  Related Information: 
  Exercise price is related to other terms such as strike price, which is the price at which an option can be exercised, and vesting period, which is the period of time during which an option can be exercised. It is also related to other terms such as grant