I agree. At the very least (from what we've all been reading) the process was messy. If I were one of the employees I'd prefer a threat (even a serious one) t

I agree. At the very least (from what we've all been reading) the process was messy. If I were one of the employees I'd prefer a threat (even a serious one) to just showing up one day and finding that I'd been fired. I too think that your third option would be best, and I wonder why there wouldn't have been some compromise made along those lines, but it's complicated by the reality that Pincus can simply fire the employees and have the shares w/o negotiating. Thus any negotiation becomes a sort of pretend dance and is as likely as not to result in bad morale. I think that at least for accounting purposes the shares are officially "earned" at the end of each work day during the vesting period. I think the argument could be made that while an employee may perceive a grant of unvested ISOs as compensation at the time they are granted, they are indeed not compensation but an optional incentive for the employer to use in the event that an employee is extremely valuable during a period of rapid growth where turnover would be harmful to the company's prospects. If the ISOs were meant to be compensation, why not have them vest immediately... the employee still would not have to pay taxes on them until they were exercised and the mechanism incentivizing performance is there simply via the purchase price.