When can incentive stock options be granted?

August 24, 2001

Subject:   ISO’s
Date:   Wed 08 Aug 2001
From:   Shelley

We are an employer that grants ISO’s to all employees. Can the Board of Directors grant an ISO to an individual prior to the individual’s hire date/vesting start date? If yes, is there any risk that the option might not be considered an ISO if granted prior to the employee’s start date since the individual was not employed on that date?

We had one attorney who had the Board pass a resolution to amend the agreements so that the grant date is the same as the vesting start date. Our new attorney says that this was not necessary and he is allowing ISO’s to be granted prior to an employee’s start date.

I would just like to understand why.



Date:   17 Aug 2001

Hello Shelley,

Since only employees are allowed to hold ISOs, I wouldn’t recommend granting the option before the employee’s start date.

Good luck!

Mike Gray

For more information about incentive stock options, request our free report, Incentive Stock Options – Executive Tax and Financial Planning Strategies.

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