A Stock Option Plan is a program that allows employees to purchase shares of their company's stock at a predetermined price, known as the exercise price. This price is typically set at the market value of the stock when the options are granted. Employees can benefit from this plan if the company's stock price increases, as they can buy shares at the lower exercise price and sell them at the higher market price. These plans are often used as a form of employee compensation and can help align the interests of employees with those of the company. By offering stock options, companies aim to motivate employees to work towards increasing the company's value, as their financial gain is directly tied to the company's performance.