What is Post-Termination Exercise Period?
Post-Termination Exercise Period
The Post-Termination Exercise Period (PTEP) is the timeframe during which a departing employee must purchase (exercise) their vested stock options before they expire.
Why It Matters for Startups
Governs the legal rights and ownership distribution of the entity; configuring Post-Termination Exercise Period is critical for managing long-term cap table health and alignment during esop design and employee exit management.
Detailed Deep Dive
The Post-Termination Exercise Period (PTEP) dictates how long departing employees have to finance their option exercises, balancing employee equity access with company pool management.
Frequently Asked Questions
Q:What is the standard PTEP for stock options?
The historical standard is 90 days, though many modern startups extend this window to several years to support employee equity.
Q:What happens if an employee does not exercise options before PTEP expires?
The options are canceled and returned to the company's ESOP pool to be redistributed.
Quick Facts
- CategoryLegal
- Key ApplicationESOP design and employee exit management
Coverage Trend12 Weeks
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