Stock Option Plan (Private Company)

Summary

This precedent is a stock option plan appropriate for a private corporation, such as a start-up, that sets forth the terms and conditions under which founders, employees, directors, and consultants may acquire stock options. This precedent includes practical guidance, drafting notes, alternate clauses, and optional clauses. A stock option plan provides employees and other participants with the ability to purchase shares of a company in the future at a predetermined price, often referred to as strike price. The ability for employees to participate in ownership and growth of the company can be a motivational tool that aligns the interests of employees and owners. When granting stock options, many factors need to be considered for the options to be valuable and effective. Participant Selection Careful consideration should be made when choosing who should be given the option to participate in a stock option plan. Long term key employees in management roles who can directly impact the ...