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Entrepreneurship & Startups vocabulary · Equity & Valuation

Stock option

Meaning in entrepreneurship & startups, with examples

/ˈstɑːk ˌɑːpʃn/nounCommon term

In entrepreneurship & startups, stock option means: The right to buy a number of company shares later at a fixed price, often given to startup employees so they can share in the company's success.

In Turkish: hisse opsiyonu, pay opsiyonu, çalışan hisse opsiyonu

How it is used

Employees are granted options, which vest over time; they then exercise them by paying the strike price. People say stock options, share options (UK), an option grant and ESOP (employee stock option plan). Options only have value if the share price rises above the strike price.

Example sentences

  1. The offer includes 0.5 percent in stock options, vesting over four years.

  2. Most early employees exercised their stock options when the company was acquired.

Common collocations

  • grant stock options
  • exercise stock options
  • strike price
  • employee stock option plan
  • share options
  • option poolA part of a company's shares set aside for future employees, advisors and other team members, usually granted as stock options.
  • vestingA system in which founders or employees earn their shares or options gradually over time, so that someone who leaves early does not keep everything.
  • equityOwnership in a company, divided into shares. In startups, equity is what founders, employees and investors hold, and its value grows if the company succeeds.
  • dilutionThe fall in an existing owner's percentage of a company when new shares are issued, for example to new investors or for an employee option pool.

More terms: Equity & Valuation

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