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When the stock options are granted, the total stock option compensation expense is calculated as the fair market value of the stock options x the number of options granted. The company would debit stock option compensation expense and credit ?equity APIC ? stock option?.
Companies going public with a direct listing bypass the lockup period, meaning employees can sell their stock options right away if they choose. Companies going public via SPAC may have longer lockup periods. A lockup period can range from 90 to 180 days.
There are generally three possibilities for what can happen to stock options in an acquisition: they can be canceled, assumed by the acquiring company, or converted into options or RSUs in the acquiring company. The specific treatment of stock options is defined by the terms of the deal and the merger agreement.
Companies often offer stock options as part of your compensation package so you can share in the company's success. Stock options aren't actual shares of stock?they're the right to buy a set number of company shares at a fixed price, usually called a grant price, strike price, or exercise price.
Stock options are only for people This issue often arises when a consultant provides services to the company and asks to have their options titled in the name of their LLC. While it's usually fine to grant stock options to an individual consultant under the option plan, grants generally can't be made to an entity.