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Equity Incentive Plan
Establish employee ownership benefits with this Equity Incentive Plan Template.
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Equity Incentive Plan Template
This Equity Incentive Plan (“Plan”) is adopted by [Company Name], a [State/Country] corporation (the “Company”), effective as of [Date].
1. Purpose
The purpose of this Plan is to promote the long-term success of the Company by providing equity-based incentives to eligible participants whose performance and loyalty contribute to the Company’s growth.
2. Definitions
For purposes of this Plan:
“Award” means any stock option, restricted stock, RSU, performance share, or other equity-based grant made under this Plan.
“Committee” means the board of directors or its designated compensation committee administering the Plan.
“Participant” means any employee, director, advisor, or consultant selected to receive an Award.
3. Share Reserve
The total number of shares of Company common stock reserved for issuance under this Plan is [Number], subject to adjustment in the event of stock splits, mergers, or recapitalizations.
4. Eligibility
Eligibility is limited to employees, directors, officers, consultants, and advisors of the Company and its subsidiaries, as determined by the Committee.
5. Types of Awards
Awards under this Plan may include, but are not limited to:
Incentive Stock Options (ISOs)
Non-Qualified Stock Options (NSOs)
Restricted Stock Awards (RSAs)
Restricted Stock Units (RSUs)
Performance-Based Awards
6. Administration
The Plan shall be administered by the Committee, which has full authority to interpret the Plan, determine participants, set award terms, and adopt rules for operation. Decisions of the Committee shall be final and binding.
7. Vesting and Exercise
Each Award shall be subject to vesting conditions as determined by the Committee. Standard vesting may include a [4-year schedule with 1-year cliff] or as otherwise determined. Exercise of stock options requires payment of the exercise price in cash or other permitted methods.
8. Transfer Restrictions
Awards may not be sold, assigned, or otherwise transferred except by will, laws of descent, or as approved by the Committee.
9. Termination of Service
Upon termination of employment or service, unvested awards shall be forfeited. Vested options may be exercised within [X days] following termination, subject to the original expiration date.
10. Adjustments
In the event of stock splits, mergers, reorganizations, or similar events, appropriate adjustments shall be made to share reserves, awards, and exercise prices.
11. Governing Law
This Plan shall be governed by and construed under the laws of [State/Country].
12. Shareholder Approval
This Plan shall become effective upon adoption by the Board of Directors and approval by the Company’s shareholders, as required by applicable law.
Signatures
Authorized Officer: _________________________ Date: _________
Name/Title: ____________________________________________
Details
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Equity Incentive Plan
EQUITY INCENTIVE PLAN FAQ
What is an Equity Incentive Plan?
An Equity Incentive Plan is a structured program through which a company grants equity-based awards—such as stock options, restricted stock units (RSUs), or performance shares—to employees, executives, board members, or consultants.
Why is an Equity Incentive Plan important?
It helps companies attract, motivate, and retain top talent by aligning employees’ financial interests with the company’s success. Equity compensation also allows companies, particularly startups, to conserve cash while rewarding performance and long-term commitment.
When should you use an Equity Incentive Plan?
Use it when your business wants to issue stock-based compensation, especially during growth stages, fundraising, or when seeking to incentivize and retain key personnel. Public companies also adopt such plans to maintain competitive executive compensation structures.
What should an Equity Incentive Plan include?
It should specify eligible participants, types of awards offered, the total share pool reserved, vesting schedules, exercise rights, restrictions on transfer, termination provisions, and administrative procedures by the board or compensation committee.
Does an Equity Incentive Plan need shareholder approval?
In most cases, yes. Corporate and securities laws typically require shareholder approval before a company can issue equity under a new incentive plan.
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