This post is adapted from a question I answered on OnStartups. Q. I’ve been working for a large private company, and my offer letter said I would receive X number of options as long as the board approved it. It’s been a year and I’ve been stonewalled on the option plan. I’ve sent multiple emails to HR and the controller and the CFO. HR has gotten back to me, but their hands are tied. Can I send a letter and a check to the CFO with $100 to force the issue of exercising some amount of shares and determining the strike price that way?
A. Unfortunately, “subject to board approval” is a common contingency for stock option grants. At this point, I’m not sure there is much you can do about it.
Last year I represented two founders whose small company was purchased by a large software company. A sizable portion of the payment price was in stock options, which had a board approval contingency. I asked the acquirer’s lawyer, “What happens if the stock option grant is not approved?” A couple of days later, he forwarded a copy of the board’s resolution approving the grant. It appears, regrettably, that your situation does not nearly give you that much clout.
Dana H. Shultz, Attorney at Law? +1 510 547-0545? dana [at] danashultz [dot] com
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