When employees leave, they usually have 90 days to exercise their vested stock options. If they miss that window, the options expire and go back to your pool — no matter how long they took to vest.

Why 90 days? The IRS requires ISOs to be exercised within three months of departure to keep their tax benefits. Most startups apply the same deadline to NSOs too, even though NSOs have no such rule.

This creates a problem. Employees who can't pull together the cash in time lose options they spent years earning. That undermines the promise your equity plan makes.

More companies now extend PTEPs to one, five, even ten years. It strengthens your employer brand and shows your equity plan rewards real contribution.

The trade-off: ISOs exercised after 90 days convert to NSOs, so the tax treatment changes.

Stripe is arranging a new tender offer at a $140B+ valuation — up from $107B in its last deal. The company hasn't raised since its $6.5B Series I in 2023 and has been profitable since 2024.

Instead of going public, Stripe has run regular tender offers since 2024 to let employees sell shares. Co-founder John Collison said in January that the company is "still not in any rush" to IPO.

This fits a pattern. The most valuable private companies — Stripe, SpaceX, OpenAI, Anthropic — are staying private longer but building structured liquidity into their equity programs.

The takeaway for companies: if you plan to stay private, your equity plan needs a liquidity story. Without one, stock options start to feel like paper promises.

Source: Bloomberg