Incentive stock options are a way that people used to draw employees and partners in over time in a startup company when you do not have enough money to pay them. They are really good and they work, but there are negative tax consequences that can come from it. Usually when you exercise your options, you’ll buy the stock and resell it right away because you can’t afford to buy it otherwise. There are some hoops you have to jump through to make sure it is not taxable at the time you get your stock option. And it is a very powerful way to draw in people where in their current company they are only being paid a salary and they don’t really have an upside to gain.

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