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... They definitely can be. When I worked for a small biotech company all of my options had a tiered vesting schedule.

NewJazz 2y ago
They aren't equity no matter what though? They can be vested, I realize that.
_heimdall 2y ago
Options aren't equity, they're only the option to buy equity at a specified price. Vesting just means you can actually buy the shares at the set strike pice. For example, you may join a company and be given options to buy 10,000 shares at $5 each with a 2 year vesting schedule. They may begin vesting immediately, meaning you can buy 1/24th of the total options each month (or 614 shares). Its also common for a delay up front where no options vest until you've been with the company for say 6 or 12 months. Until an option vests you don't own anything. Once it vests, you still have to buy the shares by exercising the option at the $5 per share price. When you leave, most companies have a deadline on the scale of a few months where you have to either buy all vested shares or forfeit them and lose the stock options.
- teaearlgraycold 2y ago
  > buy all vested shares The last time I did this I didn't have to buy all of the shares.
  - lazyasciiart 2y ago
    I think they mean that you had to buy all the ones you wanted to keep.
    - ergocoder 2y ago
      That is tautological... You buy what you want to own???
      - StackRanker3000 2y ago
        The point being made is that it isn’t all or nothing, you can buy half the vested options and forfeit the rest, should you want to.
        Hnrobert42 2y ago
        Wait, wait. Who is on first?
        d4704 2y ago
        We’d usually point people here to get a better overview of how options work: https://carta.com/learn/equity/stock-options/ https://carta.com/learn/equity/stock-options/
      - Taniwha 2y ago
        There can be an advantage to not exercising: it causes a taxable event the IRS will want a cut of the difference between your exercise value and the current valuation, it requires you to commit real money to buy shares that may never be worth anything .... And there are advantages to exercising: many (most?) companies take back unexercised shares a few weeks/months after you leave, it kicks in a CGT start date, so you can end up paying a lower CGT tax when you eventually sell You need to understand all this stuff before you make a choice that's right for you
- theGnuMe 2y ago
  Options can vest as do stock grants as well.
  - _heimdall 2y ago
    Unless I'm mistaken, the difference is that grants vest into actual shares while options only vest into the opportunity to buy the shares at a set price. Part of my hiring bonus when joining one of the big tech companies were stock grants. As they vested I owned shares directly and could sell them as soon as they vested if I wanted to. I also joined a couple startups later in my career and was given options as a hiring incentive. I never exercised the vested options so I never owned them at all, and I lost the optios after 30-90 days after leaving the company. For grants I'd take the shares with me and not have to pay for them, they would have directly been my shares. Well, they'd actually be shares owned by a clearing house and promised to me but that's a very different rabbit hole.
    - throwaway2037 2y ago
      > Well, they'd actually be shares owned by a clearing house and promised to me but that's a very different rabbit hole. You still own the shares, not the clearing house. They hold them on your behalf.
      - _heimdall 2y ago
        Looks like I used the wrong term there, sorry. I was referring to Cede & Co, and in the moment assumed they could be considered a clearing house. It is technically called a certificate depository, sorry for the confusion there. Cede & Co technically owns most of the stock certificates today [1]. If I buy a share of stock I end up actually owning an IOU for a stock certificate. You can actually confirm this yourself if you own any stock. Call the broker that manages your account and ask who's name is on the stock certificate. It definitely isn't your name. You'll likely get confused or unclear answers, but if you're persistent enough you will indeed find that the certificate is almost certainly in the name of Cede & Co and there is no certificate in your name, likely no share identifier assigned to you either. You just own the promise to a share, which ultimately isn't a problem unless something massive breaks (at which point we have problems anyway). [1] https://en.m.wikipedia.org/wiki/Cede_and_Company https://en.m.wikipedia.org/wiki/Cede_and_Company
quickthrowman 2y ago
Re-read the post you’re replying to. They said options are not vested equity, which they aren’t. You still need to exercise an option that has vested to purchase the equity shares. They did not say “options cannot get granted on a tiered vesting schedule”, probably because that isn’t true, as options can be granted with a tiered vesting schedule.

They aren't equity no matter what though? They can be vested, I realize that.

Options aren't equity, they're only the option to buy equity at a specified price. Vesting just means you can actually buy the shares at the set strike pice. For example, you may join a company and be given options to buy 10,000 shares at $5 each with a 2 year vesting schedule. They may begin vesting immediately, meaning you can buy 1/24th of the total options each month (or 614 shares). Its also common for a delay up front where no options vest until you've been with the company for say 6 or 12 months. Until an option vests you don't own anything. Once it vests, you still have to buy the shares by exercising the option at the $5 per share price. When you leave, most companies have a deadline on the scale of a few months where you have to either buy all vested shares or forfeit them and lose the stock options.

teaearlgraycold 2y ago
> buy all vested shares The last time I did this I didn't have to buy all of the shares.
- lazyasciiart 2y ago
  I think they mean that you had to buy all the ones you wanted to keep.
  - ergocoder 2y ago
    That is tautological... You buy what you want to own???
    - StackRanker3000 2y ago
      The point being made is that it isn’t all or nothing, you can buy half the vested options and forfeit the rest, should you want to.
      - Hnrobert42 2y ago
        Wait, wait. Who is on first?
        d4704 2y ago
        We’d usually point people here to get a better overview of how options work: https://carta.com/learn/equity/stock-options/ https://carta.com/learn/equity/stock-options/
    - Taniwha 2y ago
      There can be an advantage to not exercising: it causes a taxable event the IRS will want a cut of the difference between your exercise value and the current valuation, it requires you to commit real money to buy shares that may never be worth anything .... And there are advantages to exercising: many (most?) companies take back unexercised shares a few weeks/months after you leave, it kicks in a CGT start date, so you can end up paying a lower CGT tax when you eventually sell You need to understand all this stuff before you make a choice that's right for you
theGnuMe 2y ago
Options can vest as do stock grants as well.
- _heimdall 2y ago
  Unless I'm mistaken, the difference is that grants vest into actual shares while options only vest into the opportunity to buy the shares at a set price. Part of my hiring bonus when joining one of the big tech companies were stock grants. As they vested I owned shares directly and could sell them as soon as they vested if I wanted to. I also joined a couple startups later in my career and was given options as a hiring incentive. I never exercised the vested options so I never owned them at all, and I lost the optios after 30-90 days after leaving the company. For grants I'd take the shares with me and not have to pay for them, they would have directly been my shares. Well, they'd actually be shares owned by a clearing house and promised to me but that's a very different rabbit hole.
  - throwaway2037 2y ago
    > Well, they'd actually be shares owned by a clearing house and promised to me but that's a very different rabbit hole. You still own the shares, not the clearing house. They hold them on your behalf.
    - _heimdall 2y ago
      Looks like I used the wrong term there, sorry. I was referring to Cede & Co, and in the moment assumed they could be considered a clearing house. It is technically called a certificate depository, sorry for the confusion there. Cede & Co technically owns most of the stock certificates today [1]. If I buy a share of stock I end up actually owning an IOU for a stock certificate. You can actually confirm this yourself if you own any stock. Call the broker that manages your account and ask who's name is on the stock certificate. It definitely isn't your name. You'll likely get confused or unclear answers, but if you're persistent enough you will indeed find that the certificate is almost certainly in the name of Cede & Co and there is no certificate in your name, likely no share identifier assigned to you either. You just own the promise to a share, which ultimately isn't a problem unless something massive breaks (at which point we have problems anyway). [1] https://en.m.wikipedia.org/wiki/Cede_and_Company https://en.m.wikipedia.org/wiki/Cede_and_Company

quickthrowman 2y ago

Re-read the post you’re replying to. They said options are not vested equity, which they aren’t. You still need to exercise an option that has vested to purchase the equity shares. They did not say “options cannot get granted on a tiered vesting schedule”, probably because that isn’t true, as options can be granted with a tiered vesting schedule.