Questions to Ask before Accepting a Job Offer with Stock Options

Part of the Stock Options For Dummies Cheat Sheet

Your potential new job includes stock options as part of your compensation package. Before you assume that having a financial interest in your new company is automatically a good thing, ask your new employer these questions:

  • One big catch-all question: How many shares? What is the strike price? And what is the vesting schedule?

  • What kind of stock options — incentive, nonqualified, or a combination of both?

  • Can I please see a copy of the stock option agreement that I’ll be asked to sign?

  • Can I also please see a copy of the company’s stock option plan document?

  • Have there been any changes in your company’s stock option plan in the past 12 to 18 months?

  • (If you’re considering a company before their initial public offering, or IPO) What is the currently planned date or time frame for an IPO?

  • What percentage of the company’s total ownership do the shares on my stock option represent?

  • When can I next anticipate receiving another stock option grant, and under what circumstances (An annual grant? When I’m promoted? As a bonus? Merit-based?)

  • (If you’re considering a company that is already publicly traded) What has been the stability of employees who have big stock option gains — have most stayed or moved on?

  • Are there any tax implications right now for my stock option grant?

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Stock Options For Dummies Cheat Sheet

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