Stock Option

A stock option grants the right, but not the obligation, to purchase a fixed number of company shares at a set exercise price (also called a strike price) for a defined period, typically up to ten years from grant. The option has value to the holder only if the stock price rises above the exercise price before it expires; if the stock never clears that price, the option can expire worthless.

This is the feature that distinguishes an option from a restricted stock unit: an RSU delivers value whenever it vests, at whatever the stock is worth then, while an option delivers value only on the upside above its strike price. That makes options a more explicitly performance-leveraged instrument, and it is part of why options have become a smaller share of typical executive pay packages than RSUs and PSUs over the past decade.

The exercise price itself is set on the grant date and, for compliant awards, is not repriced downward later without a separate shareholder-approved process — an option "underwater" from a falling stock price generally stays that way unless the company takes that additional step.

Raghib Hussain holds unexercised Marvell stock options at a $12.12 exercise price, covering 72,976 shares still outstanding under the award.