Exercise Window
Definition
The time period during which you can exercise your vested stock options. While employed, this is typically the full option term (10 years from grant). After leaving the company, most standard agreements give you just 90 days to exercise vested options, or they expire permanently. Some companies offer extended exercise windows of 1-10 years post-departure.
Real-World Example
You leave a startup with 50,000 vested options at a $2 strike price. The current FMV is $15/share. You have 90 days to come up with $100,000 to exercise, plus you may owe $200,000+ in taxes on the $650,000 spread. If you cannot afford it, you lose all 50,000 options.
Common Mistake
Not factoring in the exercise window when evaluating an offer. A 90-day post-termination exercise window can force a terrible choice: come up with hundreds of thousands of dollars in cash (plus taxes) within 3 months, or forfeit years of vested equity. This is the "golden handcuffs" problem.
Why It Matters
The exercise window is one of the most employee-hostile provisions in standard option agreements. Companies like Pinterest, Coinbase, and Quora have adopted extended exercise windows (7-10 years). This should be a negotiation point, especially at later-stage startups.
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