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Employee Stock Options – Questions to Understanding Your Plan (part two)

Employee Stock Options – Questions to Understanding Your Plan (part two)

Image credit: Torbakhopper

Welcome to part two of three on understanding your employee stock options. Do keep in mind that the answers to all of our questions are directly related to companies and employees conducting business the US. So, without further ado, let’s continue where we left off on part one.

What would happen to my stock if the company is acquired or even merges with another company?
Is your vesting accelerated? Accelerated vesting is a form of vesting that is done much faster, therefore the employee can receive the monetary value benefit of the option  sooner.  Accelerated vesting sometimes occurs when a company is merging or there is an acquisition.  There are two ways this can happen, a single-trigger or double-trigger accelerated vesting.

A single-trigger mode happens right away after the companies have merged. Double-trigger happens when the companies merge but youare laid off as a result of the merge. This video easily highlights the differences.

As an employee, how do I measure the liquidity of my options?
There are two main factors you want to know in order to be able to measure the liquidity of your options. They are daily volume and open interest.  The higher daily volume the better it is for the stock. That means that people view it as a secure investment.  The second is open interest. That is important to keep in mind because it tells you the number of contracts that are still pending. 

Check back in for the last part of the three-part series: Employee Stock Options – Questions to Understanding Your Plan.

Stock Connections specializes in working with San Francisco Bay Area companies that are involved in mergers & acquisitions, are raising capital, or creating stock option or other equity plans. We help start-up, private and public firms become – and remain – SEC-compliant. Stock Connections’ services are designed to help both start-ups and established firms comply with SEC and other regulations in their equity compensation programs. If you or anyone you know is looking to get involved with any of the above, we encourage you to contact us today!

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