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Tech Companies Weigh Option to Extend Stock Option Eligibility

Fenwick & West startup and venture capital co-chair Cindy Hess was quoted in a Daily Journal article about privately held technology firms considering whether to significantly extend the period former employees can exercise stock options.

The Daily Journal noted that the debate was spurred by a recent Pinterest decision allowing employees with two or more years of tenure to retain vested options for seven years and is being seen as a strategy to attract top engineering talent in a highly competitive market. 

“I’ve heard from a few clients questioning whether it’s a good idea,” Hess told the Journal, qualifying that the answer depends on several factors. 

For example, Hess said, if it’s a late-stage company with a high fair market value, employees might have a problem exercising the option if they don’t have the money available. 

“One size does not fit all,” Hess said.