Glossary A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | 1 | 3 | 4 | 5 Definitions by InvestorWords.com   What is...? Nonquals Nonqualified stock options, or nonquals, are the most common form of stock option. They may be granted to employees, officers, directors, consultants, and other providers of goods and services associated with a company. Nonquals are so named because they do not qualify for special tax treatment under the U.S. Internal Revenue Code. Companies can set the exercise price and most other terms of a nonqual; beyond shareholder tolerance for dilution of ownership percentages, there are no limits on the number of nonquals that can be authorized under a stock option plan. From a tax perspective, if the market value of the stock exceeds the exercise price, the exercise of nonquals results in ordinary income to the option holder at the time of exercise. The company is eligible for a corresponding tax deduction as long as it reports the option holder's income to the IRS. Learn more about nonqualified stock options Copyright ©2009 by InvestorGuide.com. All Rights Reserved.