The stock option must be granted to at least 80 percent of the total number of employees who worked full-time in the business at any time of the year—and generally executives, highly compensated officers and those owning one percent or more of the corporation’s stock are excluded from the 80-percent rule and from being able to take the deferral election.
A company with 20 employees might ideally give stock options to three to five employees “and stock options aren’t normally the way to go except to senior management,” Fried said.