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Lesson 4. All About Vesting, Lock-Ups, etc. > What If I Leave? - Pg. 19

All About Vesting, Lock-Ups, etc. 19 Many employee stock options are good for 10 years from the grant date. This gives you a long time to decide when or if you are going to exercise the options. Immediately Vested Options Companies may, in some cases, grant options that are immediately vested, meaning there is no waiting period before the employee can exercise the options. Tip Immediately vested options often have a short term, making them generally less valuable than long-term options. Having them available immediately offsets this. Incentive stock options (ISOs) carry their own waiting period to comply with tax laws, but nonqualified stock options (NSOs) have no such limitations. Fully vested stock options have no restrictions and can be exercised at any time before their term expires. Immediately vested stock options are NSOs. If there are no other restrictions on the options, im- mediately vested options become a cashless bonus. Another characteristic of immediately vested options is a short grant term. Although not universally true, it is not unusual for a company to put a two-year term on immediately vested options. A short grant period has the effect of making your options less valuable. The reason is you have less time for the stock to appreciate in value, and should the company hit a difficult time, the stock may drop below the exercise price for the life of the option. What If I Leave? Employee stock options usually can be exercised up to one year after you retire or separate under