share option
Share Option: a right your employer gives you to buy company shares later at a price fixed today, so you gain if the company grows in value.
In plain English
Ngozi joined a fast growing tech startup in Yaba as one of the first ten staff, and her offer letter had a line she almost skipped past because she did not understand it. It said she had share options for a certain number of shares, exercisable after two years, at a price locked in from her start date.
Two years later, the company had grown, investors had come in, and shares that were once worth almost nothing were now valued much higher. Because Ngozi had that option, she could buy her shares at the old low price and immediately own something worth far more than what she paid.
That is the whole trick behind a share option. It is not a share itself, it is simply the right to buy a share later at a price agreed now. If the company does well and the share price rises, you buy low and hold something worth more. If the company struggles and the price falls below what you were promised, you simply do not exercise the option, and you lose nothing beyond time.
In the United Kingdom, this shows up a lot in tech and startup jobs through schemes like EMI options, where a junior developer in London might get options as part of a modest salary, betting that the company's growth will make up the difference over time.
For someone sending money home from abroad, share options rarely show up in take home pay straight away, so it helps to ask early how vesting works, when you can actually cash out, and what happens if you leave the company before that date.
Tunde is given options to buy 5,000 shares at ₦50 each once he completes three years at his company. Three years later, the shares are trading at ₦200 each. He exercises his option, pays ₦250,000 for shares now worth ₦1,000,000, and can choose to sell or hold.
Questions people ask
Do I own shares immediately when I get a share option?
No. You only own shares once you exercise the option, meaning you pay the agreed price to actually buy them. Before that, you simply hold the right to buy, not the shares themselves.
What happens to my share options if I leave the company?
Most companies attach a vesting schedule, so you only earn the right to exercise options gradually over a set period, often three or four years. Leave before that period ends, and you may forfeit options that have not yet vested.
Are share options the same as being paid in shares?
No. Being paid in shares means you receive actual shares as part of your pay. A share option only gives you the right to buy shares later at a fixed price, and you decide if and when that purchase makes sense for you.
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