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The fifth dimension is what conditions.
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The dimension of what conditions usually refers to the Westing and Exercise conditions.
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Westing has three elements.
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Period, Schedule and Conditions.
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You need to decide over what period the options must vest.
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The most common Westing period is four years with a one-year cliff,
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which means that no options can vest before the expiry of 12 months from the date of grant.
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That is also the minimum Westing period as per the Indian loss today,
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though it might change in the future.
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While four years is the most common Westing period,
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they could also vest over three or five years,
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or even longer if your vision dictates so.
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The second element is the Westing Schedule.
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Should they vest equally every year or in a back-ended manner,
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such as 10% in the first year, 20% in the second, 30% in the third,
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and 40% in the fourth.
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You could also vest them quarterly.
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This would again depend upon your vision and your business strategy.
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The third element is Westing Conditions.
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The options could vest merely on the basis of an employee continuing to remain in employment with the company.
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This is called Westing based on tenure.
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The options could also vest based on certain performance conditions being met.
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These conditions could be company levels such as revenue, profits, number of users, etc.,
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or employee level performance parameters.
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So you need to define the Westing period, the Westing Schedule, and the Westing Conditions.
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We will talk more about this and also exercise conditions later on in our course.
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