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