During onboarding, Shoobx will ask you 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 plan, and whether the options you're looking at were exercised, refer to the following:
- Options (ISOs/NQOs) are easy because options can only be granted inside of a plan. If you are looking at a document that says, "Stock Option Grant" or "Option Grant" or "Incentive Stock Option" or "Non-qualified Option" in the title, it is an option and must have been granted under a plan.
- RSAs are trickier. If it is not an option, but an actual stock grant, these shares might have been granted inside or outside of the plan. Grants inside of the plan will usually say something about the plan in the title or first paragraph. They may say "pursuant to the 2013 Acme Stock Incentive Plan" or something similar. This lets you know it's 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. Your cap table will keep a tally separately of two categories:
- All of the options that are outstanding (i.e., people could, at any point, choose to exercise them but have not yet)
- The options that were exercised to become legitimate stock. 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 stock incentive plan 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.
If you have any questions that are not addressed in this article let us know by emailing Support.Shoobx@fmr.com!
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