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The grant date for your ISO is the date you are given the shares. The value of the shares on the grant date determines your exercise price. The vesting date is the first date your options become available. The number of options that vest on this date and subsequent dates are subject to the rules of your ISO plan.
What is a Performance Option? A performance option is simply a stock option with additional performance conditions that must be achieved for the option to vest or become exercisable.
Performance shares are an incentive-based form of stock compensation paid to corporate managers or executives if certain benchmarks are met. Employees are often granted performance shares in the form of bonuses and/or stock options.
Stock options are also compensation expense to the company. This expense is recognized as the employee earns service time up to the vesting date. The appropriate debit is made to compensation expense each accounting period with a credit to additional paid-in capital.
Performance Based Vesting Example 10% of the 1000 shares get vested every quarter only if the stock price hits a predetermined goal for that quarter. This is Performance Based Vesting of stock units. The employee can only gain ownership when the quarterly performance goals of the stocks are met.