Hi, please answer my questions. 1. What is exercise price ? 2. What if company acquired by other company when we are in vesting period? 3. How does employee get benefit if they sell company? 4. Assume I have vesting period of 4 years, each year I get 25% shares.. I worked for 3 years and left the company.. Will I get my 75% shares? Thanks in advance
1. Exercise price or strike prices is the price per share which you and your employer agreed upon at the time of your joining/ options grant. This is the price at which you would be able to exercise all your vested options when ever you wish to in future. eg. You get the exercise price of $1 per share and you get 1000 total stock options vested in your account at the end of 4 year vesting. So if you wish to exercise (or purchase - to simplify it) all your stock options, you just need to pay $1000. The best part is, if the company is doing well and has the potential to go public soon, you can anticipate the kind of monetary gain you can get out of this. 2. The other company most probably a bigger player comparatively, will either pay you a price for your ESOPs or they can also convert your ESOPs into their company's ESOPs. Either way, you should gain profit out if it. But not as much as you can expect from public listing. That kind of profit is going to be encashed by the acquirer company. 3. Same as 2. 4. So at the end of 3 years, you will have 75% of ESOPs vested into your accout. After termination, companies give exercise time window ranging from 3 months to 10 years, depending upon how senstie they are for emplyee welfare. So after leaving, its upto you if you wish to exercise(purchase) your vest ESOPs or not. You will have to make a decision at that time. And be aware of the taxation rules at the time of exercise.
Does amount of ownership of shares influence the control over the company ?? And if we in first vesting period does we have control over the company?? And how much control ??because we don't have any share in the company at that moment, and it will credited after completing our first vesting period. Please answer 🙏 Thankyou ☺️.
Usually the ESOPs granted are very less in quantity that it does not have an impact on the control of a company. For an example, the total ESOPs given to all the employees in a company rarely cross single digits, so in that case, there is no question of control over the company. Answering your second question, the grant date only gives you the confirmation of owning the shares after a certain period, so while the vesting period is going on, you have no shares and practically no authority or power that might come with those shares. This is after the exercise. Hope that helps. - Prithvi
Hello Sir , On what parameters a company Grant ESOP schemes to its employees . Parameters -vesting period and all those terminologies or anything else there .
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