The following is not meant to be legal advice.
Continuing on the basics involved in stock options to employees, the specific contract between the employee and the Company are the stock option agreements, which reflects the terms and conditions of the option granted under the plan.
After the Board approves the grants, the employees will obtain grant documentation agreements. The option is priced at the “fair market value” of the underlying shares “common stock” on grant date. Fair market value” of the Company’s stock is the price that a reasonable person could be expected to pay for the stock. When the Company has not yet “gone public,” the Board determines the fair market value. If the Company has gone public fair market value is typically the closing price on the day option is granted.
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