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The next dimension to consider is the coverage of your stock options strategy.
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Who should be granted stock options?
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Should it be granted to everyone or only to a select number of people?
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There are multiple perspectives to consider here.
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First, based on your values and vision, what is the kind of culture you think would be
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right for your company?
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Does that culture envision everyone receiving stock options or only a few people?
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Second, what is your expectation from the team members who are granted stock options?
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Do you expect them to behave differently once they become option holders?
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In that case, you would need to consider if the recipients have the maturity to appreciate
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stock options and the responsibility that they might convey.
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Everyone understands what they mean.
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If you do well, I will become rich, but understanding is not the same as appreciation.
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For instance, you might want to consider if the recipients have the ability to take a big picture view of the organization
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or are they too junior or inexperienced to do that at the moment.
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Third, where do they sit in your compensation framework for the recipients?
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Consider this.
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You pay a salary to someone.
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By virtue of receiving that salary, they are expected to contribute to a certain extent
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or bring about a certain growth rate.
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Salary is usually paid with certain expectations of performance or delivery.
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If stock options sit over and above the cash compensation, what do you expect the recipients to deliver
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beyond what they are to deliver for their salary?
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Or do stock options fill in for the reduction they agreed to take on their salary?
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Fourth, while you might be granting stock options with an expectation to motivate the recipient,
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does the recipient view these options as motivating?
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Sometimes certain people are better motivated through immediate cash rather than a distant long-term reward.
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Fifth, do you have a sufficient stock option spool to grant an adequate number of options to all the recipients?
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This is something we will cover in the next dimension, but as I mentioned, a few dimensions overlap
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and certain forces may act against each other.
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You need to consider these perspectives, balance them according to your values and vision,
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and take your decision accordingly.
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So please consider them one at a time when you design your policy.
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