The Stock Option Lifecycle

Grant Date

• On this date, your employer specifies the theoretical price of your stock options
• This is when your 'vesting' usually begins
• This is also known as the sticker price

Vest Date

• Employers want to incentivize you to stay around longer, so they deliver your shares over a vesting schedule rather than giving them all up-front
• A typical vesting schedule is four years long

Exercise Date

• When you exercise shares, this means that you have paid for ownership of them
• You may or may not be able to 'sell' your shares when you exercise them depending if a liquidation event (such as an IPO) has occurred

Expiration Date

• Usually this is no longer than 10 years from the grant date or 90 days after you leave the company

Sell Date

• This can happen if there has been a qualifying liquidation event such as an IPO
• The timing of when you decide to sell impacts whether or not you pay ordinary income tax or long-term capital gains tax
• In order to pay long-term capital gains tax, you must sell at least one year after the exercise date and two years after the grant date