Definition for: NSO
A "non-qualified stock option" or "NSO" is a stock option which does not qualify for the special tax treatment accorded to incentive stock options. Non-qualified stock options result in additional taxable income to the recipient at the time that they are exercised, the amount being the difference between the exercise price and the market value on that date. Companies often grant non-qualified stock options to consultants and outside advisors. The option when granted typically contains a vesting schedule where the option is earned over time, and is exercisable at a specified price.
