<aside> 🚨 DISCLAIMER: This is not intended to be Legal, Tax, or Financial advice. Please consult a professional before making any decisions related to stock options.
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All employees at Givebutter own a slice of the butter. Why? Because owning equity aligns your financial success to the work you do everyday to help Givebutter grow. Seeing your impact to the company, having actual ownership, and sharing in Givebutter’s success creates great job satisfaction. But equity can be really confusing, our team has broken it down here so that you understand what this investment means.
Equity - the value of the shares issued by a company.
Shares - the unit of equity ownership.
Stock - all the shares by which ownership of a corporation or company is divided.
Stock options - type of equity compensation that gives you the legal option to buy shares. There are different types of options:
Strike Price - the agreed-upon price in which you can purchase your shares, set by the company and listed on your equity grant. The strike price listed on your option grant will not change over time or when you exercise.
Equity grant - any compensatory grant of stock.
Exercise - the act of purchasing your shares at the set strike price.
Vesting - the process of earning something over time, in this case, the process in which you earn the right to exercise your shares over time based on the vesting schedule.
Vesting Schedule - the schedule set by the company by which your shares vest.
Cliff - the period of time that has to elapse before your shares begin vesting.
Grant Date - the date in which shares are given to the recipient.
Vesting Commencement Date - the date in which your shares begin their vesting schedule.
Expiration Date - the date by which you must exercise your shares before they expire (this is typically 10 years from Grant Date).
Liquidity / Liquidity Event - the ability or opportunity to sell your shares for cash. A Liquidity event in a private company occurs if or when the company decides to IPO, joins with another company in an M&A, or offers a liquidity event (like a tender offer) to its employees.