An option grant is the formal board action of approving and issuing stock options to a recipient. It is documented by a board resolution authorizing the grant, a Notice of Grant delivered to the recipient, and a Stock Option Agreement specifying share count, strike price (set by the current 409A valuation), vesting schedule, expiration date, and option type (ISO or NSO). It is the formal transaction that converts an option-pool reserve into an actual employee equity grant, and the documentation must be correct or the grant's tax-favored treatment can be jeopardized.
The standard option grant process: