What is 'non-qualified stock option' in SAP PA-EC - Enterprise Compensation Management?

non-qualified stock option - Overview

• Component: PA-EC

• Component Name: Enterprise Compensation Management

• Description: A type of stock option that does not meet the IRS criteria for incentive stock options ISOs and therefore subject to tax on exercising.

non-qualified stock option - Details

• 
  Key Concepts: 
  A non-qualified stock option (NQSO) is a type of stock option granted to employees of a company that does not qualify for special tax treatment under the Internal Revenue Code. NQSOs are typically granted to employees as part of their compensation package and can be used to purchase shares of the company’s stock at a predetermined price. 
  
  How to use it: 
  The SAP Enterprise Compensation Management (PA-EC) component enables companies to manage their NQSOs. It provides a comprehensive set of tools for tracking and managing NQSOs, including the ability to set up and manage option grants, track option exercise activity, and generate reports on option activity. 
  
  Tips & Tricks: 
  When setting up an NQSO grant in PA-EC, it is important to ensure that all relevant information is entered accurately. This includes the grant date, exercise price, vesting schedule, and expiration date. Additionally, it is important to ensure that the grant is properly configured in order to comply with applicable laws and regulations. 
  
  Related Information: 
  For more information on NQSOs and how to use PA-EC to manage them, please refer to the SAP Help Portal or contact your local SAP representative.