Equity Incentive Plan

An Equity Incentive Plan (EIP) is the board-approved and shareholder-approved document that authorizes the company to grant equity-based compensation to employees, consultants, and directors. It governs the universe of terms applying to those grants (option types allowed, maximum shares authorized, vesting structures, exercise mechanics, termination provisions, change-of-control treatment) and is legal infrastructure required before any equity grants can be made. It's the legal foundation underlying every equity grant.

The contents:

Plan administration:

• Board (or committee) administers the plan.
• Determines who gets grants, sizes, terms.

Eligible participants:

• Employees (incentive stock options or NSOs).
• Consultants ...