These instruments represent a contractual agreement granting employees the right, but not the obligation, to purchase shares of C3.ai’s common stock at a predetermined price (the exercise price) within a specified timeframe. For instance, an employee might be granted the option to buy 1,000 shares at $30 per share; if the market price rises above $30, the employee can exercise the option and purchase the shares at the lower price, potentially realizing a profit.
They serve as a crucial component of the company’s compensation strategy, aligning employee interests with those of shareholders by incentivizing performance and long-term growth. This approach has been employed historically by technology firms to attract, retain, and motivate talent, particularly in competitive markets. The potential for financial gain, tied directly to the company’s success, encourages employees to contribute actively to its overall value.
