A strike price is the price an employee pays to exercise each stock option. Exercising converts a vested option into a real share that can later be sold. section 21.4.2
The price matters alongside percentage ownership, vesting, expiration, and financing details. Employees usually must first vest their options, then pay the strike price to turn them into shares they own. section 21.4.2 section 4.2
Keep these practical distinctions in mind:
- Vesting creates the right to exercise options over time; exercise requires paying the strike price. section 4.2
- The strike price applies per option, not to the whole grant as one lump sum. section 21.4.2
- Employees who leave typically have only a small period, usually 90 days, to exercise vested options. section 4.2
Employee options versus founder shares
Founders might pay only $50 for 500,000 founder shares, while employees pay the strike price to exercise vested options. The two forms of equity therefore involve very different purchase costs. section 4.2
