When do I use a stock option award letter?

Date published: 2021-02-24   — by Will Elton

 

stocksEssentially, a  Stock Option Award Letter, also known as a Letter for Grant of Option, is a letter given by the company to an employee. It states that it is granting him, her, or they, options in the company, according to the terms in the Employee Stock Option Plan (ESOP).

What is in a Stock Option Award Letter?

Date of Grant.  The date that the stock option was awarded to the employee.

Exercise Price.  The exercise price that can be used to purchase the option.  This should have been set in the Employee Stock Option Plan.

Vesting Schedule.  The vesting schedule specifies when the shares can be exercised or if any performance criteria need to be met.

Payment Method.  The payment method stipulates how the employee should remit payment when they exercise the stock option.

When Should You Use a Stock Option Award Letter?

Chiefly, a stock option award is a great incentive for employees to help the company achieve its goals. Importantly, always send a formal letter to underscore the importance of the employee’s contribution.  

Conclusion

To sum up, a Stock Option Award is a great way to incentivize employees.  A Zegal template will guide you through the creation process with minimal effort and maximum protection.

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Tags: legal documents | start up legal documents | stock options

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