plan granting an employee the right to purchase company stock at a later date at a specified option price that will most always be lower than the market price; also called incentive stock option. If the stock price goes below the option price, the company can issue the executive a second incentive option with a lower exercise price. There is a $100,000 per employee ceiling on the value of stock covered by options that are exercisable in any one calendar year. Another advantage to the corporate executive of an incentive stock option is that no tax is paid until the stock bought with the option is sold.