> ## Documentation Index
> Fetch the complete documentation index at: https://docs.launchboard.xyz/llms.txt
> Use this file to discover all available pages before exploring further.
# Equity plans and option pools
> Create stock option plans with defined share pools, vesting terms, and cancellation behavior — the required foundation for issuing equity grants.
An equity plan — sometimes called a stock option plan or equity incentive plan — is a defined pool of shares set aside to grant options or restricted stock to employees, advisors, and consultants. Before you can issue any stock options, you need at least one equity plan that the grant will draw from.
Equity plans live at **Equity → Plans**. Each plan defines its name, the total number of shares reserved, the share classes it draws from, and what happens to shares when a grant is cancelled.
## What's on an equity plan record
| Field | Description |
| ------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------- |
| Plan name | The formal name of the plan, e.g. "2024 Equity Incentive Plan" |
| Shares reserved | The total number of shares authorized for issuance under this plan |
| Share classes | The share class(es) from which grants under this plan are issued (typically a Common Stock class) |
| Cancellation behavior | What happens when a grant is cancelled: `Return to pool` (shares become available for future grants) or `Retire` (shares are permanently retired) |
| Board approval date | The date the board approved the plan |
| Stockholder approval date | The date stockholders ratified the plan |
## Creating an equity plan
Navigate to **Equity → Plans** in the left sidebar.
Select **Add equity plan** from the top-right action area.
Give the plan a clear, formal name. The convention is to include the year and purpose, for example "2024 Equity Incentive Plan" or "2025 Stock Option Plan".
Enter the **initial shares reserved** — the total number of shares you're setting aside for grants under this plan. This should match the amount approved by your board.
Select the share class that grants under this plan will be issued from. This is usually your Common Stock class. You can link multiple classes if your plan covers more than one.
Select what happens when an employee's unvested options are forfeited. `Return to pool` is the most common choice — it makes cancelled shares available again for future grants.
If you have the board and stockholder approval dates, enter them. These are recorded for compliance and appear in OCF exports.
Click **Create**. The equity plan is now available to reference when issuing stock options and restricted stock grants.
If you've uploaded your equity plan document (typically an Equity Incentive Plan PDF) to the Dataroom, Launchboard can extract the plan terms and create the equity plan record for you during the merge step.
## Vesting schedules
Vesting schedules define when a grantee's shares become fully theirs. You don't attach a vesting schedule to the plan itself — you attach vesting terms to each individual security (grant) at the time of issuance.
### How vesting terms work
A vesting term is a reusable template that specifies:
* **Total vesting period** — how long until all shares are fully vested (commonly 48 months / 4 years)
* **Cliff period** — how long before any shares vest at all (commonly 12 months / 1 year)
* **Vesting frequency** — how often shares vest after the cliff (monthly is standard)
* **Cliff percentage** — what portion vests at the cliff date
You manage vesting terms at **Equity → Vesting Terms**. Once created, a vesting term can be applied to any number of grants.
### Standard 4-year / 1-year cliff schedule
The most common vesting structure for startup employee equity is:
* **4 years total** (48 months)
* **1-year cliff** — 25% of the grant vests on the one-year anniversary of the grant date
* **Monthly vesting thereafter** — the remaining 75% vests in equal monthly installments over the following 36 months
This structure means an employee who leaves before their first anniversary receives nothing, and an employee who stays all four years owns their full grant.
A cliff is a minimum tenure requirement before any equity vests. With a 1-year cliff, an employee who leaves at month 11 receives zero shares. On the first anniversary (month 12), the full cliff amount vests at once — typically 25% of the total grant. Vesting then continues monthly for the remaining period.
Acceleration provisions allow a grantee to vest shares faster than the normal schedule on the occurrence of specific events. The most common types are:
* **Single trigger** — acceleration on a change of control (acquisition or IPO), regardless of whether the employee is terminated.
* **Double trigger** — acceleration only if both a change of control occurs AND the employee is terminated without cause within a set period afterward.
* **Termination without cause** — acceleration if the employee is terminated without cause, regardless of whether an acquisition is involved.
This depends on your plan's cancellation behavior and the terms of the individual grant. Typically, unvested shares are forfeited and returned to the plan's available pool (if you've set cancellation behavior to `Return to pool`). Vested options may have a limited post-termination exercise window, after which they expire.
## Vesting milestones
In addition to time-based vesting, Launchboard supports event-based vesting milestones — for example, "25% vests upon FDA approval" or "10% vests upon the company achieving \$1M ARR." You manage these at **Equity → Vesting Milestones**.
Milestones can be combined with time-based schedules in a hybrid vesting term, giving you full flexibility to match any grant structure you've negotiated.
## How equity plans relate to grants
When you issue a stock option security, you reference the equity plan the grant draws from. Launchboard tracks how many shares have been granted under each plan and how many remain available. This available-pool calculation factors in active grants, cancelled-and-returned shares, and exercised options.