Stock options cliff date

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If you options submitting your own blog content, the date body of the content must be included in the post, properly formatted for reddit. If you include a link, your post will have to be approved by the mods. Founders of the Startup Date. Jaan Tallinn, Skype date. Silicon Valley Venture Capitalist. Previous Share your Startup threads. Typical grant date vs. For those who have been granted stock options — what's a typical spread date your vesting start date and the ultimate board-approved grant date?

I'm looking at a situation where mine is about 10 months, which really affects my exercise price, and wanted to get a sense of how unusual that is.

Your question date a date confusing. The exercise price should be equal to the price on or aroundthe grant date. Generally the first chunk of stock options will vest about 12 months after they are granted, which is often called a cliff. The vesting schedule should have no impact on stock exercise price though. Right, I understand that. What I'm wondering about, really, is the situation in which your grant date is significantly after your starting vesting start dateand in that time, the company has changed significantly.

For example, I join a company January 1, and have an ISO of 10, shares. At that time, the company has 5 employees and a valuation of X. The board, though, only grants me those options on December 1, a full 11 months later, at which time the company has a valuation of 10X. The exercise price is pegged to that grant date, and indeed, my vesting schedule is unaffected—however, my shares cliff much, much more expensive for me to purchase.

This is based on the schedule given in the initial stock option grant. So if you "have" 10, stock options on January 1st, then by definition they must be options. If they are granted, the strike price is likely set at whatever the value of the company is on January 1st.

If you are granted another set of stock options on December 1st, then date might have a new strike price, but that wont affect the previously granted options. There are some complicated permutations that can occur with stock options, and my answer is intentionally not mentioning getting into that, but based stock your initial question I think there is some confusion about basic terms and I'm not cliff what you are asking.

Sorry, you're right — I am not being clear. When I say vesting date, I mean 'vesting start date'. That should clear that up. I've edited the above to make that clear as well. Generally options vesting start date is your first day of working there. If you already work there and have to wait 10 months before you start vesting anything, that is crazy. However, if you are going to start working there in 10 months, this is perfectly reasonable.

If there is a 10 month "cliff", in which after 10 months you get 10 months worth of stock options, that is completely normal. No, no — I am still not being clear. I started vesting immediately, but my grant date is 10 months after that date, during which time the company raised a round, etc. The vesting schedule is normal 1 year cliff, 4 years. A better way to say it is that you will be granted stock options in 10 months, but with a special vesting schedule that will have the first 10 months worth already vested.

You can't vest stock that hasn't been granted yet, which is tripping up a lot of people: Yes, stock months would be an extremely long amount of time, especially because the board of a typical company meets every quarter.

Additionally, the board typically creates a stock option grant plan which can be implemented every time a new employee is hired, so every single stock option grant doesn't need to be approved by the board.

So this means either the current stock option pool is exhausted stock the board doesn't want to authorize a new one options a while, or the company is structured in some bizarre way. Either way it is bad for you. Additionally, since stock options must be granted at or above the market value, you are running the risk you mention that the stock options are going to have a higher exercise price which means they are less valuable.

So, this is not standard at all, and a considerably bad deal for you. You cliff certainly consider the rest of the compensation when valuing the offer from the company maybe options are paying more cash due to this situationbut I'd discount the value of the stock options for 2 reasons:. OK, many thanks for the thoughts. Unfortunately, this is the current situation I'm in, and from what I can see online, I don't really have any strong cliff — but I hope this thread provides some useful information to others.

I was not aware that grant dates and start dates could diverge so much. Sounds like that is something unusual and to be aware of The average is probably between 9 months to a cliff. Think of the gap between grant date and vesting date as the bare minimum duration of employment that the employer expects.

Yeah, that I understand. I stock my question really is about how quickly after receiving your options do boards typically approve the final grant?

It seems date if the company cliff growing quickly, the amount of time and valuation that that takes, has a significant impact on your exercise price? But like I said, it's typically about the minimum options that options would expect someone to be around for. Ok, I have been confusing everyone by using 'vesting date' when I mean 'vesting start date'.

So basically your start date, assuming you start vesting when you start. Your stock options need to cliff approved by the board, and lets say, for whatever reason they don't get around to it for awhile, and your grant date isn't say, for another year.

So that's when the exercise price is fixed — potentially stock a very different valuation than when you've started. I'm trying to see if this is common, as it seems a bit disingenuous to me, and stock definitely to be aware of. And I think you're confusing your terms here, because the grant date is when they fix the price of your stock options, which is typically when you sign the employment contract. So the gap between vesting start date and grant date will usually be about 0, because it's an irrelevant number.

Ah, see — that was not the case in my situation. I signed the offer, which specified the of shares, date to board approval," and then received the final grant on my "grant stock, which was 10 months later. I do think cliff typical for there to be some window of time between your options date and your grant date.

I just don't know what a normal number is. Use of this site constitutes acceptance cliff our User Agreement and Privacy Policy. By signing up, you agree to our Terms and that you have read date Privacy Options and Content Policy. Log in or sign cliff in seconds. What is a startup? We want to ask you anything! Flair Message stock mods for instructions on how to get flair verifying your experience.

Titles must be clear and descriptive. Submissions must have at least characters of content. Hacker News Notable AMA's Emperor Alexis Ohanian Founders of the Startup Institute Jaan Tallinn, Skype co-founder Imgur Founder Mozilla Contributer Silicon Valley Venture Capitalist Previous Stock your Startup threads New to the scene? Find your closest Startup Weekend! This is an archived post. You won't be able to vote or comment. Here are what the terms generally mean: You should certainly consider the rest of the compensation when valuing the offer from the company maybe they stock paying more cash due to this situationbut I'd discount the value options the stock options for 2 reasons: If the stock options are going to be worth something, the company will probably grow very fast.

Taking the value of the company in 10 months could make your options worth significantly less The company is structured or operations in a non-standard way that isn't good for employees, which is not a good thing in an employee-friendly market. They are going to have trouble competing cliff talent with this kind of bizarre agreement. I don't get that at all. Date are automatically archived after 6 months.