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There is an upfront investment you'll need to make in order to issue options to your first set of employees. Develop your philosophy. Your stock option plan is an expression of your startup philosophy. ... Paper it. Adopt your stock plan and option agreements and get board and stockholder approval. ... Make it official.
A stock option plan is a mechanism for affording selected employees and executives or managers of a company the opportunity to acquire stock in their company at a price determined at the time the options are granted and fixed for the term of the options.
So start off right: Plan ahead. Your first step is planning. ... Manage your equity. ... Set some guidelines for stock options. ... Get a 409A valuation. ... Use the 409A to set the strike price. ... Adopt your vesting and cliff schedule. ... Set an expiration timeline. ... Create an ESO agreement and get your board's approval.