Stock Grant Agreement Template

Create a legally sound stock grant agreement that protects your company and clearly communicates equity terms to employees. Includes vesting schedules, tax implications, and compliance requirements.

Stock Grant Agreement Template

A stock grant agreement is a legally binding document that outlines the terms and conditions under which a company issues shares of its stock to employees or other recipients. This comprehensive template helps companies create clear, enforceable agreements that protect both the organization and stock recipients.

What This Template Is For

This template is designed for companies offering equity compensation through direct stock grants. It provides a structured framework for documenting the grant terms, vesting schedule, and conditions that govern the stock award. The agreement helps prevent misunderstandings and ensures compliance with securities laws and regulations.

When To Use This Template

Use this stock grant agreement template when:

  • Offering equity compensation to new employees
  • Implementing a company-wide stock incentive program
  • Providing additional compensation to key employees
  • Documenting stock awards for board members or advisors
  • Establishing vesting terms for equity grants

How To Customize It

Follow these steps to customize the template:

  1. Insert company and recipient information in designated fields
  2. Specify the number of shares being granted
  3. Define the vesting schedule and conditions
  4. Add any specific transfer restrictions or rights
  5. Include relevant tax implications and reporting requirements
  6. Review and adjust non-compete and confidentiality provisions
  7. Have legal counsel review the final agreement

Common Use Cases

Stock grant agreements are commonly used in:

  • Startup employee compensation packages
  • Executive retention programs
  • Performance-based incentive plans
  • Board member compensation
  • Merger and acquisition transactions

Best Practices

Follow these guidelines for effective stock grant agreements:

  • Clearly state all vesting conditions and timelines
  • Include detailed tax implications and responsibilities
  • Specify any transfer restrictions or rights of first refusal
  • Define termination scenarios and their impact on unvested shares
  • Maintain consistency with company stock plans and bylaws

Template Variations

Consider these variations based on your needs:

  • Time-based vesting agreements
  • Performance-based vesting agreements
  • Restricted stock agreements
  • Immediate grant agreements
  • Hybrid vesting agreements

Success Stories

Companies have successfully used this template to:

  • Attract top talent with competitive equity packages
  • Retain key employees through strategic vesting schedules
  • Align employee and company interests
  • Implement clear, legally sound equity programs

Frequently Asked Questions

What is the difference between a stock grant and stock options?

Stock grants provide actual shares of company stock, while options only give the right to purchase shares at a predetermined price.

When do recipients pay taxes on stock grants?

Generally, recipients pay taxes when the shares vest, based on the fair market value at that time.

Can vesting schedules be modified after the agreement is signed?

Modifications require mutual agreement and should be documented in writing with appropriate legal review.

What happens to unvested shares if employment terminates?

Typically, unvested shares are forfeited upon termination, but specific terms should be outlined in the agreement.

Are stock grants transferable?

Transfer restrictions are common and should be clearly specified in the agreement.