Answer

1. F

   Facts

   Vesting is when the employee earns the right to exercise options. Standard: 4-year vesting with 1-year cliff, nothing for the first year, then 25% vests at the cliff, then monthly/quarterly for 3 more years.

2. P

   Provisions and law

   • SEBI SBEB Regulations | Companies Act 2013 Rule 12
3. A

   Analysis

   Acceleration triggers: "Single trigger", vests on acquisition. "Double trigger", vests on acquisition AND the employee is terminated within X months. Investors prefer double trigger (single trigger makes key employees want the company to sell).

4. C

   Conclusion

   1. 14-year vesting / 1-year cliff is global standard, don't deviate
   2. 2Monthly vesting after cliff (not annual, reduces employee anxiety)
   3. 3Good leaver: continues to vest for notice period, keeps vested options for 90 days to exercise
   4. 4Bad leaver (cause-based termination): unvested options lapse, vested options may also lapse
   5. 5Double trigger acceleration on acquisition, better for all parties

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