Understanding Employee Stock Options
employee stock options guide for sale. When accepting stock
options as a part of an overall compensation package, the employee needs to
carefully review two documents:
I have found that many employees have no real
understanding of the necessary questions to ask when negotiating
the equity (stock option) portion of their overall compensation package.
Use this checklist as you prepare your research for a
salary negotiation, or your next performance review, or when you are in line
for a promotion. Some of these questions are essential to understanding the
value of your stock option award, and others simply help explain the
implications of certain events or situations.
Don't be surprised if you have options now and can't
answer some of these questions - they're not all obvious, even to people who
have received stock options before.
The ten most important questions about your stock options
are as follows.
What type of options have you been
How many options do you get?
How many shares in the company are
outstanding and how many have been approved?
What is your strike price?
How liquid are your options, or how
liquid will they be?
What is the vesting schedule for your
Will you get accelerated vesting if your
company is acquired or merges with another company?
How long must you hold your shares after
an IPO, merger, or acquisition?
When you exercise your options, do you
need to pay with cash, or will the company float you the exercise price?
What kinds of statements and forms do you
get or do you need to fill out?
Especially if you are in a privately held company. The
burden is on the employee to educate his or herself on how much they are
worth in the marketplace. Additionally, I have worked in companies where the
senior management team did not understand the simple mechanics of stock
option pricing. The pointers in the document for sale below are proven and
sound. They will help you get a better deal.
If you are in a pre-IPO company, how well you negotiate
your option package could very well be the difference between tens and
hundreds of thousands of dollars if your company is acquired or goes public.
Downloadable MS Word file, 21 Pages.