Option Pool

Everybody in.

Yeah, it's a pool. Only with options, not water (but maybe champagne if the IPO goes well).

When tiny companies are started, the option pool and all the elements around it are (or at least can be) hugely important. Typically, an early-stage company makes its option pool a really big deal, as the allure of being the next GOOG-AMZN-FB-NFLX is, well, sexy. So a typical option pool might be 20% of the ownership of the company, which is then granted to key employees, who then vest into the ownership of those options over 4 or 5 years. The pool comprises that 20%, and if a company is around a long time, the water in the pool has to be re-filled every few years as granted by the Board of Directors.

See: ESOP. See: Vesting. See: Qualified Stock Option.