Determining grants inside or outside the plan

During onboarding, you will be asked to add all stock and option grants (including warrants). This upload process will require you to know the security type of each grant your company has issued.

If you need to determine what shares on your cap table were granted inside or outside of the Stock Incentive Plan (SIP), and whether the options you're looking at were exercised, refer to the following:

Options (ISOs/NQOs): Stock options can only be granted from the SIP. If you are looking at a document with Stock Option Grant, Option Grant, Incentive Stock Option, Non-qualified Option or similar in the title, it is most likely a stock option issued from the SIP.
Restricted Stock Awards (RSAs): Determining if restricted stock was issued from the plan can be trickier. If it is not an option, but a stock grant, these shares might have been granted inside or outside of the plan. Grants inside of the plan will usually include something about the SIP in the title or first paragraph, for example, "pursuant to the 2013 Stock Incentive Plan" or "Notice of Restricted Stock Grant Under the Stock Incentive Plan" or similar. This helps you determine if it was issued under a plan. If no such reference to a plan exists, it is likely granted outside of the plan. If you are not sure, it's always best to consult your lawyer.

How can I tell what shares were granted inside or outside the plan, and why does it matter?

Options are just that - an option to buy stock. They are not actual stock yet, but can be once they are purchased, or exercised. Your cap table will keep a separate count of two categories:

Total options that are outstanding (i.e., the amount of option grants issued and that could be exercised)
Total options that have been exercised. The cap table keeps track of this for several reasons. One example would be that investors in due diligence want to know how many people are real shareholders versus those with an option to buy stock and become a shareholder.

Every SIP has a pool of shares set aside to be granted under the plan. You must know which shares count against this number, and which shares do not. This allows you to know how many shares you have left under the plan or if you have run out of shares.

You can read all about stock incentive plans and the difference between the options (ISO/NQOs) and the shares (RSAs) that you can grant under a plan in our article, understanding what a Stock Incentive Plan is.

For more information about the concept of exercising options, read our article, Exercise Options, and learn about the existence of early exercise. And finally, read all about the concept of cap tables in our post Anatomy of a Cap Table.

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Fidelity Private Shares LLC provides cap table management and other administrative services to private companies and their equity compensation plans.

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How to Upload Your Grants During Onboarding

Determining grants inside or outside the plan

How can I tell what shares were granted inside or outside the plan, and why does it matter?

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Determining grants inside or outside the plan

How can I tell what shares were granted inside or outside the plan, and why does it matter?

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