Vesting is the process of earning an asset, like stock options or employer-matched contributions to your 401(k), over time. Companies often use vesting to encourage you to stay longer at the company. Unless your company allows early exercising, you can only exercise stock options that have vested.
The short answer is yes. However, you have to ensure that your offering is compliant with all the relevant regulations in both your and your contractor's country. In some regions, for instance, your contractor may be eligible to receive non-qualifying stock options, but your contractors in other countries may not.
A company's equity incentive plan is also called the employee stock option plan. It outlines the company-wide program of granting different types of equity compensation. The typical types of stock and stock options include: restricted stock.
Employee Stock Option: Pursuant to clause (b) of Sub Section (1) of Section 62 of Companies Act, 2013, the Company can offer shares through employee stock option to their employees if shareholders approve such scheme by way of passing special resolution subject to the conditions specified under Rule 12, of Companies ( ...
However, when you sell an option—or the stock you acquired by exercising the option—you must report the profit or loss on Schedule D of your Form 1040. If you've held the stock or option for one year or less, your sale will result in a short-term gain or loss, which will either add to or reduce your ordinary income.
Size of the option pool A typical employee stock option pool at pre-seed round is about 12-15%, diluted to 10% at series A. Michael Houck adds that the employee option pool at Launch House sits at 10%. "We have an employee option pool as part of our equity structure. It's 10%, which we recommend to be pretty standard.
In summary, 1% equity can be a good offer if the startup has strong potential, your role is significant, and the overall compensation package is competitive. However, it could also be seen as low depending on the context. It's essential to assess all these factors before making a decision.