Stock options are capital policy, not merely a hiring incentive

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This English page is prepared together with the Japanese article for readers who prefer English. LegalAgent is an AI Native Law Firm focused on corporate legal work, startup legal support, M&A support and practical legal outsourcing for modern companies.

Overview

This article explains why stock options should be designed as capital policy, including dilution, option pools, grant targets, vesting, leaver treatment and financing impact.

Key points

• An option pool is a dilution reserve, not merely a recruiting budget
• Numbers shown to candidates and numbers in the capitalization table should be distinguished
• Grant targets should be based on future contribution and capital policy
• Vesting and leaver treatment should be decided before problems occur

Practical perspective

In practice, this topic should be reviewed together with the transaction structure, internal approval flow, counterparty relationship, business priority and risk tolerance. Generative AI can support initial organization, comparison and drafting, but attorneys or the legal team should remain responsible for final legal judgment.