Stock options

Also called: options, employee options, ESOP

The right to buy shares in the company later at a price that is set today. Startups often give these to employees as part of their pay. An 'option pool' is the block of shares set aside for this.

For example: An early employee gets options to buy shares at today's low price. If the company grows, they can buy at that old price even though the shares are now worth more.

Connects to 9

Equity Concept
Vesting Concept
Cap table Concept
Equity vs cash compensation Concept
Option pool Concept
409A valuation Concept
Cliff Concept
Advisor shares Concept
Offer letter Concept

This glossary is plain-language orientation, not legal or financial advice. Before you decide on a company structure, a contract, taxes or a fundraising deal, talk with a lawyer or an accountant.