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Equity Glossary

The Betts Team
April 29, 2022

Cliff: A period of time before your option grant vests. Often the cliff is the one-year period from your initial start date or the date your shares were issued.

Exercise: When you purchase your vested shares at the set strike price in your options grant. 

Strike Price: The price per share it would cost to purchase (exercise) each vested option. 

Liquidity: When you convert your stock into cash. 

Liquidity Event: If your company is merging, has an offer to be purchased (tender offer), or IPO you can sell your shares for cash.

Lock-up period: A period of time that you cannot sell your stock, typically this only occurs when a company goes public.

Stock dilution: If your company is raising additional funds, a company could also issue additional shares. When additional shares are issued, your ownership via the shares is reduced. 

Stock Options: The right for you to buy a certain number of shares at a defined strike price.

Trigger: An event that can accelerate vesting. A trigger typically occurs when an acquisition occurs or when you leave a company.

Vesting: The earning of assets such as stock options. The vesting period is typically in your offer letter and can last 3-4 years depending on your grant. 

Vesting Period: The total amount of time for all of your shares to become eligible to purchase.
Vested Options: The amount of options you are eligible to purchase.