The standard amount of time that departing employees have to exercise their stock options is 90 days. However, some well-known companies have chosen to diverge from this usual path. Companies like Pinterest, Square, and Coinbase offer employees who have worked for a minimum period of time an extended window in which they can choose to exercise options. Triplebyte, a tech recruiting website, recommends that companies implement a 10-year exercise window instead, which could become the next industry standard.
The market for employees in the tech field is extremely competitive. Companies should aim to retain their talented and vital team members by incentivizing them as much as possible, and their hard work will ultimately be rewarded if their employees stick around long enough for a liquidity event. However, more employees are changing jobs as companies are staying private longer. As they leave from one company to the next, their previous options typically need to be exercised within 90 days of their termination date, or they lose the right to exercise their vested options. It is a big investment decision whether or not to exercise these options, so the more time the employee has to decide the better. Still, choosing to extend this exercise period is a serious and tricky decision for companies themselves. There are quite a few things to look out for when making a decision.
With the technology industry growing so rapidly and their market for employees being in such high demand, there will always be need for more and more incentives to retain the most talented workers. However, there must be a balance between keeping the workforce happy and actually running a successful operation. Every startup is different, and every approach to how to incentivize their team must also be unique.