A Stock Option Plan gives the company the flexibility to award stock options to employees, officers, directors, advisors, and consultants, allowing these people to buy stock in the company when they exercise the option. Stock options may be offered both by private companies like startups, as well as publicly traded companies like Google and Walmart. For private companies, equity is typically a percentage of ownership in a company when that company goes public. The following shows how stock options are granted and exercised: ABC, Inc., hires employee John Smith. As part of his employment package, ABC grants John options to acquire 40,000 shares of ABC’s common stock at 25 cents per share (the fair market value of a share of ABC common stock at the time of grant).