What Are They?
One of the most popular methods for incentivizing your amazing team is to issue stock options, allowing them to take part in the growth of your business and see real rewards for helping you grow. It also helps attract great people without spending a lot of money (a huge bonus we think).
Option Agreements vs. Option Plans
Stock options can be issued individually or to a group under a single plan.
Individual option agreements are typically used when granting options to a small number of people or where the terms of the options granted to each person are unique.
Option plans are a standard set of terms that apply to all issued options. When you want to issue options, you just fill out the certificate and the terms are all already in the option plan.
So What Are My Options?
With stock options there’s no once size fits all package! There are a lot of different terms to consider, including:
- Vesting. When your option holders can turn their options into shares.
- Exercise Price. How much your option holders need to pay to turn their options into shares.
- Termination of Employment. If you’re granting options to employees, what happens to their options if they quit or are terminated.
- Sale of the Business. If you sell your business before all options are vested, are those options lost or can your option holders convert them early for the sale.