Sample Stock Option Plan Documents

Sample_Documents

DISCLAIMER: This is a sample template provided for informational purposes only. It does not constitute legal, tax, or financial advice. Organizations should consult their own legal and tax advisors and tailor this document to reflect their specific business needs, geographies, and applicable laws.

Stock Option Plan Documents: <Company Name>

Document Header

Field	Value
Document Title	Stock Option Plan Documents
Document Type	Stock Option Plan Documents
Category	Variable Compensation
Version	v<Major.Minor>
Effective Date	<Date>
Last Review Date	<Date>
Next Scheduled Review	<Date> (annually or every <Number> months)
Document Owner	Total Rewards (Primary), Legal (Co-owner)
Executive Sponsor	<Title of Executive Sponsor> (e.g., Chief People Officer)
Plan Name	<Company Name> 20<YY> Stock Option Plan
Plan Code	<Plan Code or Acronym> (e.g., <CN-SOP-20YY>)
Jurisdictions Covered	<Country>, <Country>, <Country> (with local appendices)
Confidentiality	Internal Use Only

Purpose and Objectives

Define the governance, administration, and operational standards for the <Company Name> Stock Option Plan and related plan documents
Enable consistent, compliant, and market-competitive equity grants that support attraction, retention, and alignment with shareholder interests
Provide a reference framework for Total Rewards, Legal, Finance, and Stock Administration to design, implement, and maintain plan documents and processes
Clarify roles, responsibilities, and approval thresholds to ensure effective internal controls and audit readiness

Scope and Applicability

This document covers the master Stock Option Plan, grant agreements, notices, local appendices, procedures, and related communications for <Company Name>
Applies to all equity-eligible employees, directors, and consultants as defined herein, across all covered jurisdictions
Includes guidelines for option types (ISO/NSO or local equivalents), grant cycles, vesting, exercise, taxation, accounting, and corporate action treatment

In Scope

Creation, maintenance, and periodic review of the master plan document and local appendices
Standard and non-standard grant guidelines (new hire, promotion, retention, performance, and annual refresh)
Vesting schedules and acceleration provisions
Exercise mechanics, settlement methods, and share delivery processes
Insider trading compliance and blackout coordination
Recordkeeping, accounting recognition, financial reporting, and taxation processes
Vendor systems administration, data privacy, and security practices
Communication materials for employees, managers, and candidates

Out of Scope

Executive employment contracts beyond equity terms referenced herein
Cash incentive plans and non-equity long-term incentives
Board governance charters unrelated to compensation matters
Detailed local tax advice to participants (refer to personal tax advisors)

Applicability

The plan applies to eligible employees of <Company Name> and its designated subsidiaries
Eligibility and grant values may differ by location, job level, and employee segment pursuant to local law and market practice
All grants remain subject to approval by the authorized governing body per this document

Plan Documents and Governance

Plan Structure and Components

Master Stock Option Plan (the Plan)
Global Grant Agreement and Grant Notice
Local Law Appendices for each <Country> where grants are made
Exercise Notice, Tax Withholding and Acknowledgment forms
Prospectus or Participant Information Summary, as required by local law
Board and Compensation Committee resolutions
Prospectus filings and securities notices where applicable
Administrative Procedures and Controls Manual
Employee and Manager Communications

Document Inventory and Ownership

Document	Description	Primary Owner	Update Frequency
Master Stock Option Plan	Governing document defining plan rules	Legal	Every <12> to <24> months or as required
Global Grant Agreement	Contract with participant; incorporates jurisdiction-neutral terms	Total Rewards with Legal review	Annually or upon legal changes
Local Appendices	Country-specific terms to ensure compliance	Legal with local counsel	As legal changes occur
Grant Notice	Participant-specific terms (shares, price, vesting)	Stock Administration	Per grant cycle
Exercise Forms	Forms for exercise method selection and acknowledgments	Stock Administration	As process changes
Employee Prospectus	Plain-language summary for participants	Total Rewards	Annually or upon plan change
Admin Procedures	Step-by-step operational processes and controls	Stock Administration, TR, Finance	Semi-annually

Governance and Authority Matrix

Board of Directors: Approves plan creation, material amendments, share reserve increases, and repricings if ever contemplated
Compensation Committee: Approves grant pools, design parameters, executive and director grants, and exceptions
CEO and Delegates: Approves non-executive grants within pre-approved guidelines and budgets
Total Rewards: Designs plan features, calibrates guidelines, partners with Legal and Finance
Legal: Ensures compliance with corporate, securities, tax, and employment laws
Finance: Oversees budgeting, expense recognition, forecasting, and disclosures
Stock Administration: Executes day-to-day operations, recordkeeping, and participant support
Internal Audit: Periodic control testing and process assurance

Plan Design Overview

Option Types

Incentive Stock Options (ISOs): Available only to eligible U.S. employees under Section 422 of the Internal Revenue Code, subject to <Company Name>’s ISO limits
Non-Qualified Stock Options (NSOs or NQSOs): Available to employees, directors, and eligible service providers
Local Qualified Options: Where applicable under <Country> programs (e.g., tax-advantaged schemes), subject to local appendices

Share Reserve and Limits

Initial Share Pool: <Number> shares, representing approximately <Percentage> of fully diluted shares outstanding on <Date>
Evergreen Provision: Annual increase of up to <Percentage> of outstanding shares as of <Date> each year, subject to Compensation Committee approval
Individual Limits: No participant may receive options covering more than <Number> shares or <Percentage> of the annual pool in any fiscal year without Committee approval
Overhang Target: Maintain total overhang at or below <Percentage> of fully diluted shares
Repricing: No repricing or cancellation-and-regrant at a lower exercise price without shareholder approval

Eligibility and Grant Guidelines

Eligibility: Full-time and part-time employees of <Company Name> and designated subsidiaries; directors and consultants as permitted by law and plan rules
Grant Sizing: Guided by job architecture and market medians at the <Percentile> percentile; calibrated by <Company Name>’s equity compensation philosophy
Performance and Differentiation: Use performance modifiers between <Percentage> and <Percentage> of guideline for top and below-expectation performers
Promotion Grants: Target increments based on level change; typical range <Percentage> to <Percentage> of new-hire guideline for the new level
Refresh Grants: Consider annual refresh for critical roles; typical range <Percentage> to <Percentage> of market guideline
New Hire Grants: Sized to meet competitiveness in <Market>; may include sign-on equity with cliff vesting

Vesting, Term, Exercise, and Price

Vesting Schedules

Standard Vesting: 4-year vesting with a 1-year cliff and monthly vesting thereafter
Alternative Schedules: Quarterly or annual vesting; front-loaded or back-loaded vesting permissible within guidelines
Performance-Based Vesting: Allowed where clearly defined; performance metrics must be objective and measurable
Service Condition: Continuous service required to vest, except as otherwise provided in the plan

Example Schedule	Vesting Detail
Standard	25 percent after 12 months, then 1/48 monthly thereafter
Quarterly	6.25 percent quarterly over 4 years
Annual	25 percent annually over 4 years

Option Term and Expiration

Option Term: Options generally expire 10 years from the grant date; for ISOs granted to 10 percent shareholders, term limited to 5 years
Post-Termination Exercise Window: Standard 90 days for voluntary or involuntary termination; subject to local law and plan terms
For Cause: All unvested and unexercised options are forfeited immediately upon a termination for cause
Retirement: If eligible under plan definition, post-termination exercise window may be extended to <Number> months subject to legal feasibility and tax considerations
Death or Disability: Unvested portion may accelerate up to <Percentage>; vested portion exercisable by estate for <Number> months

Exercise Methods and Settlement

Exercise Methods: Cash, cashless (broker-assisted same-day sale), net exercise, or cashless hold subject to plan rules and local restrictions
Share Delivery: Shares delivered in book-entry form; fractional shares rounded per plan methodology
Withholding: Shares may be withheld to satisfy tax obligations up to the maximum statutory rate where permitted by law
Timing: Exercises processed within <Number> business days after complete documentation and funds are received

Exercise Price and Fair Market Value

Exercise Price: Set at no less than the Fair Market Value (FMV) on the grant date, as determined under the plan
FMV Determination: For private companies, FMV determined by an independent <409A or local equivalent> valuation as of <Date> and updated at least every <Number> months or upon material events
Currency: Exercise prices set and recorded in <Currency> for U.S.-listed shares, with local currency display for convenience where offered

Trading Windows and Blackouts

Insider Trading Policy: Participants must comply with <Company Name>’s Insider Trading Policy and any applicable pre-clearance rules
Blackout Periods: No trading or option exercises that involve market sales during designated blackout periods
10b5-1 Plans: Permissible for eligible insiders per policy and legal requirements

Employment Events and Special Cases

New Hire Grants

Granted within <Number> days of start date or the next Committee-approved cycle
Grant date tied to the next regular grant date following hiring to enable compliance and operational efficiency
Vesting standard per plan unless an exception is approved

Promotions and Role Changes

Promotion grants effective on the first regular grant date after promotion
Grant sizing aligned to new level guidelines; prior grants remain unchanged

Leaves of Absence

Paid Leave: Vesting continues per schedule
Unpaid Leave: Vesting may pause after <Number> days of unpaid leave, resuming upon return, subject to local law
Statutory Leave: Comply with local statutes; see local appendix for <Country>

Termination of Service

Voluntary or Involuntary (Not for Cause): Unvested options forfeited; vested options exercisable for <Number> days
For Cause: All options forfeited immediately
Redundancy or Workforce Restructuring: Consider extended exercise windows up to <Number> days if permitted by law and approved by Committee
Retirement: Defined as age >= <Age> and service >= <Years>; special vesting or exercise terms may apply per plan
Death or Disability: See plan for acceleration and extended exercise windows; local law may override

Mobility and International Transfers

Tax and social security liabilities prorated across jurisdictions per time-based allocation where required
Option administration updates home and host country records; local appendix governs withholding and reporting
Participants may face exercise restrictions in certain <Country> locations; Stock Administration to notify impacted individuals

Corporate Transactions and Adjustments

Change in Control (CIC)

Definition: A merger, acquisition, or sale of substantially all assets, or other events as defined in the plan
Acceleration: Double-trigger acceleration is standard; unvested options accelerate upon CIC plus qualifying termination within <Number> months
Assumption/Substitution: Options may be assumed or substituted by the acquirer; otherwise, vesting acceleration or cash-out at FMV may occur
Performance Options: Convert to time-based vesting at target or actual performance-to-date per Committee determination

Capitalization Changes

Adjustments for stock splits, reverse splits, dividends, and similar events to preserve value on an equitable basis
Fractional share handling per plan terms

IPOs, Spin-offs, and Delistings

IPO Lockups: Exercises and sales may be limited during lockup period
Spin-offs: Options may be adjusted or replaced with options of successor entities as determined by Committee
Delisting: Alternative liquidity mechanisms may be considered for private company context

Prohibited Repricing and Exchanges

No repricing or option exchange programs without prior shareholder approval and Legal review
Committee retains discretion to cancel underwater options for no consideration if authorized

Administration, Processes, and Controls

Roles and Responsibilities

Total Rewards: Plan design, market competitiveness, and policy stewardship
Legal: Drafts plan and agreements; oversees securities and employment law compliance
Finance: Budgeting, ASC 718/IFRS 2 expense, forecasting, and disclosures
Stock Administration: Grant processing, participant support, exercise settlement, recordkeeping
Payroll and Tax: Withholding setup, reporting, and remittance
HR Business Partners: Manager coaching and employee guidance
IT and Security: Access controls for systems
Internal Audit: Control testing and periodic audits
Compensation Committee: Oversight and approvals

Grant Lifecycle Process

Workforce planning and equity budget allocation finalized by <Date>
Managers submit nominations in <System Name> by <Date>
Total Rewards validates sizing against guidelines and budget
Legal and Finance review exceptions and confirm compliance and costing
Compensation Committee approves grants on <Date>
Grant letters and agreements generated and distributed via <Vendor Name> platform
Participants accept grants electronically within <Number> days
Stock Administration books grants, confirms FMV, and triggers accounting recognition
Participant education sessions scheduled and FAQs updated

Controls and Compliance Checkpoints

Segregation of duties between request, approval, and booking
Automated FMV checks and non-backdating controls
Exception logging with Committee approval references
Reconciliation of plan reserve to outstanding, exercised, and canceled options monthly
SOX-ready audit trail with immutable event logs in <Vendor Name>

Systems and Vendors

Equity Administration System: <Vendor Name> for grant, vesting, and exercise tracking
Brokerage: <Broker Name> for exercise and sale execution
Payroll: <Payroll System> integration for tax withholding and reporting
HRIS: <HRIS Name> for eligibility and organizational data
Data Integrations: Secure SFTP or API feeds with encryption standards <Standard>

Data Privacy and Security

Personal data processed under <Country> privacy laws (e.g., GDPR, CCPA equivalents)
Data Processing Agreement in place with <Vendor Name> and <Broker Name>
Retention: Retain participant equity data for <Number> years after termination or as required by law
Access: Role-based access controls and quarterly access reviews
Cross-border transfers using approved mechanisms (e.g., SCCs) where applicable

Recordkeeping and Audit

Maintain plan documents, minutes, approvals, grant files, and participant acceptances
Quarterly tie-outs between plan reserve, cap table, and financial statements
Annual external audit support package including sample agreements and SOC reports

Accounting, Tax, and Legal Compliance

Accounting Framework

For U.S. reporting, recognize compensation expense under ASC 718; for non-U.S., IFRS 2 or local GAAP as required
Valuation of options using <Valuation Model> (e.g., Black-Scholes), with assumptions for volatility, expected term, dividend yield, and risk-free rate documented by Finance
Modifications: Incremental expense recognized upon repricing, acceleration, or other modifications per applicable standards

Tax Withholding and Reporting

U.S. ISOs: No withholding on grant or exercise; potential AMT implications to participant; disqualifying dispositions reported on Form <Form Number>
U.S. NSOs: Withholding at supplemental rate upon exercise; report income on Form W-2
Non-U.S.: Follow local requirements for timing of taxation (grant, vest, or exercise), reporting, and remittance; see local appendices for <Country>
Social Insurance: Withhold employer and employee contributions where applicable
Tax Mobility: Allocate taxable income across jurisdictions using days-based apportionment where required

Securities Law and Listings Compliance

Private Company: Ensure compliance with <Exemption Reference> (e.g., Rule 701) thresholds and disclosures
Public Company: Comply with exchange listing requirements, Form <Form Number> filings, and insider reporting (e.g., Section 16 equivalents)
Prospectus/Offering Documents: Provide participant disclosures per <Country> law

Insider Trading, Hedging, and Pledging

Prohibit hedging or pledging of company securities except as permitted under policy
Require pre-clearance for designated insiders during open windows

Local Law Considerations

Country-specific rules related to currency controls, securities filings, tax-qualified regimes, and labor law
Local appendices prevail in case of conflict between global documents and local law

Budgeting, Philosophy, and Equity Strategy

Equity Philosophy

Align employee and shareholder interests, prioritize ownership culture, and manage dilution responsibly
Target market positioning at the <Percentile> percentile for total compensation with equity as a key differentiator

Pool Sizing, Burn Rate, and Dilution Targets

Annual burn rate target: <Percentage> to <Percentage> of weighted average basic shares outstanding
Cumulative overhang cap: <Percentage> of fully diluted shares
Refresh strategy: Request evergreen increase annually if within thresholds; otherwise pursue shareholder approval for pool top-up

Grant Calibration and Mix

Mix of vehicles: Options used for growth alignment; consider RSUs for conservation of shares where appropriate
Differentiation: Top performers may receive up to <Percentage> of guideline upside; below expectations may receive <Percentage> to <Percentage> reductions or be excluded from refresh

Forecasting and Scenario Planning

Finance produces 3-year dilution scenarios under varying stock price and attrition assumptions
TR updates staffing plans and refresh demand semi-annually
Committee reviews burn and overhang quarterly versus targets

Implementation Guidelines

Project Plan for Plan Adoption or Refresh

Define objectives, success metrics, and constraints
Engage external counsel and valuation provider
Draft or update plan, grant agreements, and local appendices
Socialize design with Executive Team and key stakeholders
Prepare equity budget, dilution scenarios, and shareholder materials
Obtain Board and shareholder approvals as required
Configure systems, workflows, and controls in <Vendor Name>
Launch employee education and manager enablement
Monitor adoption, collect feedback, and iterate

Operational SLAs and Timelines

Grant Processing: Within <Number> business days after approval
Exercise Settlement: Within <Number> business days after funds and documents received
Helpdesk Response: Initial response within <Number> hours; resolution within <Number> business days
Payroll Tax Remittance: Within statutory deadlines for each <Country>

Forms, Notices, and Artifacts

Grant Notice with participant-specific details
Global Grant Agreement and applicable Local Appendix
Exercise Notice and Tax Withholding Acknowledgment
Prospectus or Summary for each <Country>
Manager talking points and employee FAQs
Candidate recruiting one-pager outlining options

Review, Approval, and Maintenance

Approval Workflow

Total Rewards drafts plan changes and coordinates with Legal and Finance
Compensation Committee reviews and approves plan parameters and exceptions
Board approves material amendments and share reserve increases
Shareholders approve as required by law or listing rules
Stock Administration implements in systems and communicates changes

Periodic Review Cycle

Annual comprehensive review of plan competitiveness, compliance, burn rate, and overhang
Semi-annual legal review of local appendices
Quarterly control testing and reconciliation reports to Finance and Internal Audit

Version Control and Revision History

Version	Effective Date	Summary of Changes	Approved By
v1.0	<Date>	Initial release of Stock Option Plan Documents	Compensation Committee, Board
v1.1	<Date>	Added double-trigger CIC language and updated evergreen provision to <Percentage>	Compensation Committee
v1.2	<Date>	Updated local appendices for <Country> tax changes; clarified exercise methods	Legal, Total Rewards

Risk Management and Controls

Key Risks and Mitigations

Legal Non-Compliance: Mitigated through Legal review, local counsel engagement, and periodic audits
Backdating or Pricing Errors: Mitigated by automated FMV feeds, approval checkpoints, and date locks in <Vendor Name>
Excessive Dilution: Managed via burn rate targets, scenario planning, and Committee oversight
Operational Errors: Reduced through standard operating procedures, dual controls, and reconciliation
Data Breach: Mitigated with encryption, access controls, and vendor SOC reports

Exception Handling

Any deviation from policy requires written justification, TR and Legal review, Finance impact assessment, and Compensation Committee approval
Maintain an exception log including rationale, approvers, and time-bound sunset date

Glossary of Terms

Fair Market Value (FMV): Price determined under plan rules on the grant date
Incentive Stock Option (ISO): Tax-advantaged U.S. employee option under Section 422
Non-Qualified Stock Option (NSO): Option that does not qualify as an ISO; taxable at exercise
Cliff Vesting: Initial period with no vesting followed by a lump vest
Graded Vesting: Incremental vesting over time
Exercise: Purchase of underlying shares at the exercise price
Exercise Price/Strike Price: Price per share set at grant
Overhang: Outstanding awards plus remaining shares reserved, as a percent of diluted shares
Burn Rate: Annual granted shares as a percent of weighted average shares outstanding
Change in Control (CIC): As defined in plan; typically a merger or acquisition event
Double-Trigger Acceleration: Vesting accelerates upon CIC and qualifying termination
For Cause: Defined in plan or employment agreement; triggers forfeiture
Mobility: Cross-border movements impacting tax and compliance
10b5-1 Plan: Pre-arranged trading plan meeting legal requirements

Participant Tax and Legal Notices

Participants are responsible for personal tax consequences associated with grants, vesting, exercise, and sale of shares
<Company Name> does not provide personal tax or financial advice; participants should consult their own advisors
Local laws may impose additional restrictions, filings, or taxes; refer to the relevant local appendix

Appendices Overview

Local Appendix Contents (Template)

Eligibility clarifications and definitions for <Country>
Securities law disclosures and any filing references
Tax withholding obligations, rates, and timing
Currency control rules and remittance instructions
Employment law considerations (e.g., non-vesting during unpaid leave)
Data privacy notices as required by <Country>

Sample Vesting and Exercise Timeline

Event	Timing	Owner
New hire grant approval	Within <Number> days of start date or next cycle	Compensation Committee
Grant issuance and acceptance	Within <Number> days after approval	Stock Administration
Cliff vest	12 months after grant date	N/A
Ongoing vesting	Monthly or quarterly thereafter	N/A
Exercise window post-termination	<Number> days	Participant, Stock Administration

Communication Section: About Your Stock Options at <Company Name>

Welcome and What This Means for You

At <Company Name>, we believe in sharing the value we create together. Stock options are one way we invite you to become an owner. When you receive stock options, you get the right to buy shares of <Company Name> at a fixed price, called the exercise price. If our company grows and our share price increases, your options can become valuable. Your effort helps drive that growth, and options are designed to connect your contributions to our long-term success.

How Your Options Work in Practice

When you are granted options, you will receive a Grant Notice showing how many options you have, your exercise price, and your vesting schedule. Vesting is simply the timeline over which your options become available for you to exercise. A common schedule at <Company Name> is 25 percent after your first year, then a portion each month so that you reach 100 percent after four years. You must remain employed through each vesting date to earn those options, except if your grant documents say otherwise.

Once an option vests, you may choose to exercise it. Exercising means you purchase the underlying shares at the exercise price shown on your grant. You can pay with cash, through a broker-assisted sale, or in some cases by having a portion of shares withheld to cover costs and taxes. When you exercise, you will see the shares in your brokerage account with <Broker Name>.

A Simple Example

Imagine you receive 4,800 options at an exercise price of <Amount> per share. After one year, 1,200 options vest. If the current market price is higher than your exercise price, you may decide to exercise some or all of your vested options. If the market price is lower, you can simply wait. Options give you flexibility for up to the full term of the grant, usually 10 years, as long as you remain eligible and follow the plan rules.

Key Moments to Keep in Mind

Your options are tied to your employment. If you leave <Company Name>, any unvested options stop vesting and are forfeited. Vested options generally remain exercisable for a limited time, commonly 90 days, but check your grant documents for details. If you are considering a leave of absence or a career change, we encourage you to contact the Stock Administration team to understand your specific timelines.

If <Company Name> is ever acquired or merges with another company, our plan has rules to protect participants. Often, your unvested options may be assumed by the new company and continue vesting, or they may accelerate if you experience a qualifying termination after the change. The exact terms are in your grant agreement, and we will communicate clearly if a corporate event occurs.

Taxes and Your Responsibilities

Taxes can apply when you exercise options and when you sell shares. The rules vary by country and by the type of option. For example, Non-Qualified Stock Options usually trigger ordinary income taxes at exercise. Incentive Stock Options may have different tax timing and can affect your alternative minimum tax. Because everyone’s situation is different, <Company Name> cannot provide personal tax advice. Please speak with a qualified tax advisor before exercising or selling.

Staying Compliant and Making Good Choices

Your grant is subject to <Company Name>’s Insider Trading Policy. That means you may only trade during open trading windows or under an approved 10b5-1 plan if you have one. If you have access to material nonpublic information, you must wait until the information is public and the trading window is open. These rules protect you and the company.

You will accept your grant online through our equity platform at <Vendor Name>. Please read your documents carefully. They include important terms such as vesting, expiration, and what happens if your job status changes. If you do not accept your grant by the stated deadline, your grant may be canceled.

Getting Help

We want you to feel confident about your stock options. If you have questions, we are here to help.

For questions about your vesting, exercise methods, or brokerage account, contact Stock Administration at <Email Address> or <Phone Number>
For questions about plan terms or eligibility, contact Total Rewards at <Email Address>
For questions about insider trading or legal matters, contact Legal at <Email Address>
For tax questions, please consult your personal tax advisor

You can also find step-by-step guides, short videos, and FAQs on our intranet at <Intranet Link>. We recommend reviewing these resources before your first exercise so you know what to expect.

A Final Thought

Stock options are a long-term opportunity. There is no requirement to exercise immediately upon vesting, and it can be helpful to consider your risk tolerance, financial goals, and tax situation. Our goal is to make ownership understandable and accessible. Thank you for being part of <Company Name> and for the impact you make every day.

Document Information:

Document Type: Stock Option Plan Documents
Category: Variable Compensation
Generated: August 24, 2025
Status: Sample Template
Next Review: <Insert Review Date>

Usage Instructions:

Replace all text in angle brackets < > with your company-specific information
Review all sections for applicability to your organization
Customize content to reflect your company's policies and local regulations
Have legal and HR leadership review before implementation
Update document header with your company's version control information
At bottom of the document you find a short example on how the content could be communicated to end-users, for instance employees.

This sample document is provided for reference only and should be customized to meet your organization's specific needs and local legal requirements.