Negotiating Stock Options

Ask to get an Incremental Vesting Schedule, which allows you to buy a few shares every month or quarter. It will probably get you fully vested in the same period of time, but in smaller more frequent steps along the way. Also ask for Accelerated Vesting in the event your employer merges or is bought by another company. This way, you become fully vested at the time of the acquisition.

Your agreement will also limit the time period in which you can exercise your options, including when you can first exercise them, and the point at which your option ends, usually on termination of employment. You will want to extend this period as far as you can, beyond the time you leave the company. For example, if you have a non-compete , or a non-disclosure clause, you are essentially still tied to the company for a specific period of time, so you should negotiate to exercise your options through the same period of time covered by your non-compete and non- disclosure clauses.

If you are not offered a "cashless exercise provision" you should certainly negotiate for one. A cashless exercise provision allows you to buy stock without spending any of your hard-earned salary. When you buy a block of stock, you are simultaneously allowed to sell as many shares as are required to cover the costs of buying the stock- leaving you with the stock, but not out of pocket.

Getting the stock options is one thing, exercising them is another step that you will not want to take without professional financial counsel. You might try checking out www.mystockoptions.com or www.myoptionvalue.com.

Stock options will only become an issue when a job offer is firmly on the table. It is both the most complex, and for the employer, most flexible issue you will negotiate. As such, it should be left until an easier time so that you don't muddy the water on other issues. Follow the advice of your counsel, and be sure to ask for each of the reasonable provisions I have discussed with you here.

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