Option / Equity Plans

Companies often grant options – or the right to purchase shares at a set price – to employees as a form of compensation or incentive. In order to set aside shares to grant to employees at a future date, companies will create an Equity Plan. These plans are known by a wide variety of names – Option Pool,Employee Pool, Employee Incentive Plan, etc. A common size for an Equity Plan is about 10-20% of the outstanding shares.

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