What is the grant date of an employee stock option?

The grant date for your incentive stock options is the date you are given the shares. The grant date is also the date the shares are typically valued. This value often determines your exercise price. The exercise price is the price you can buy shares of stock via your option.

How do refresher grants work?

The best refresh programs offer an employee a new grant at year two or three, after 50-75\% of the employee’s initial grant has vested. This boxcar structure gives the employee the lower option strike price because they are granted earlier and creates a smooth vesting schedule for employees over time.

What is a refresh equity grant?

What Are Refreshers? The concise definition of a refresher, according to one Quora post, is. “an incremental grant by a company of additional ownership of the company to an employee or other team member who has already received an initial equity grant.”

What is an option refresh?

A reload option is a type of employee compensation in which additional stock options (ESO) are granted upon the exercise of the previously issued options. Reload options are features which, rather than paying the employee in cash, upon being exercised the employee is compensated in shares of the company’s stock.

Is grant date same as Issue date?

Grant price/exercise price/strike price: The specified price at which your employee stock option plan says you can purchase the stock. Issue date: The date the option is given to you. Vesting date: The date you can exercise your options according to the terms of your employee stock option plan.

Is grant date the purchase date?

The offering date is also called the grant date. The purchase date, which is when the company buys its own shares at a discounted rate on behalf of employees, marks the end of the offer period.

Do refresh grants have cliffs?

A SERG is structured as follows: A refresh grant is issued and communicated once an employee has vested the third full year of her initial grant. The new grant takes the form of a 1+4 grant, meaning there is a 1 year “cliff” (or “option preview”), and then the SERG begins to vest monthly over the ensuing 4 years.

What is annual refresher?

Yearly refresher means that the stock option portion of your comp will get refreshed – you’ll get more stock and/or have it vested for another 4 years. A 4 year cliff is when your stock is completely vested, driving down your TC. A refresher prevents a stock cliff.

What is stock refresher?

A refresher grant may be options or RSUs, and is granted to an existing employee to reward performance and make their vesting runway longer. Companies typically set refresher grants as a percentage of how much stock a current new hire would receive for the same role.

Can vesting date be before grant date?

Typically investors will accept a vesting commencement date of up to one year prior to the date of grant, assuming the founders can demonstrate that they were in fact working on the company during that time frame. The most common vesting frequencies, after any cliff vesting period, are monthly or quarterly.

Is offering date same as grant date?

The offering period is the length of time that you may be allowed to contribute after-tax money into your employee stock purchase plan. The grant date is the first day of the offering period.

What is the meaning of grant date?

A grant date is the date on which a stock option or other equity-based award is granted to the recipient. The grant date is considered to be that date on which an employer and an employee agree upon the most essential terms and conditions associated with the award.

How much do refresh grants dilute stock options?

Keep in mind that when companies grant equity with refresh grants, they are diluting all existing shareholders as options are not free. Most companies dilute themselves by about 5\% per year (although there is a huge range in the amount of annual dilution) based on new hires, promotions and refresh grants.

When is the best time to refresh a grant?

The best refresh programs offer an employee a new grant at year two or three, after 50-75\% of the employee’s initial grant has vested.

Why do companies grant refresh options?

Since most companies are growing and performing well, the option grants required to hire full-time employees at any given level decreases each year to reflect the lower risk profile of the Company. Finally, management teams can grant refresh options at their discretion to reward performance.

How much should you spend on annual refresh grants?

As a rule of thumb, the value of annual refresh grants after the third year of employment should equal 25\% of the cost of a full-time replacement hire. Since most companies are growing and performing well, the option grants required to hire full-time employees at any given level decreases each year to reflect the lower risk profile of the Company.