Definition
An option pool is a set percentage of a company�s shares set aside to grant stock options to employees, typically used in startups as an incentive to attract and retain talent.
Related Services
Human resources, compensation planning, and legal services help companies structure and manage option pools to align employee incentives with company performance.
Problem and Application
The size of the option pool can dilute existing shareholders, but it is necessary to incentivize and retain employees, especially in early-stage companies.
Conclusion
An option pool is an essential tool for startups to attract and retain talent, but companies must balance its size to avoid excessive dilution.
