Resources and thoughts on recurring stock option grants?

Question: I'm currently working on a project for a high-growth, 500 ee company in the tech sector, would like to implement recurring stock grants as a retention strategy. Need information on best practices and creative ideas around vesting schedules, grant timing (annual, bi-annual, promotional, etc.).

Any resources or anecdotal input would be terrific.  I'm familiar with NASPP but am not sure how granular their data cuts are for private and pre-IPO co's.

Dan Walter's Answer:

Equity compensation plans are a specialty of mine. As far as data goes for a company your size, in the tech sector, I would probably start with Radford and Culpepper for the granular "comp style" stuff.  The NCEO also has some good information.

The NASPP is likely to have more information for public companies that private, but the details they have regarding features such as termination rules, exercise types and accounting/taxation issues is very useful.

All of that being said, creating a recurring grant program is far more about your companies goals and compensation philosophy than it is about market data. Market data has a difficulty incorporate all of the unique details that make equity compensation compensation programs work for some companies and fail for others.

Most of the survey data you find will show that companies of your size use stock options, those stock options have a four year vesting schedule (25% annual vesting or 25% at the end of the first year and monthly thereafter). They will show values that are related to the price at the time of grant, rather than what is expected to be realized or planned to be achieved.  Data won't show much about the current trends to RSUs as you get closer to an IPO. The data won't show the increase in performance unit plans for management and above. The data also won't show the provisions around change in control or termination provisions.  Most importantly it won't show WHY the each company made each decision, or whether the decisions turned out as expected.

I would be happy to have a quick chat to point out some of the key considerations regarding putting a program like this in place. I can also direct you to some specific resources once I understand better what your objectives are.  Feel free to shoot me a message, or give me a call 415-625-3406, or contact me via email (

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I am looking for specific information on design considerations and options/practices in developing a long term incentive plan for a privately held company.