Legal Updates

Setting of options expiration date in an option agreement will trump over the language of the employees stock option plan

January 17, 2019
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A Company's employee stock options plan set that options expire 90 days after termination of employment, but an employee of the company contended that his options did not expire because the option allocation agreement set a date that is 10 years after signing the agreement. Another employee who demanded to exercise the options despite the lapse of time, his expiration date was 5 years after signing the agreement.

The Regional Labor Court held that the options did not expire 90 days after the date of termination of employment, but on the expiration date recorded in the allocation agreement. In order to construe an option allocation agreement, it must be read together with the employees stock option plan to which it is subject. The company's option plan explicitly states that the expiration date of the options is 90 days from the end of the relationship between the Company and the employee, unless otherwise stipulated in the optionee's option agreement, and therefore the personal allocation agreement trumps. From the wording of the option agreement it can be understood that the intention was to set a different expiration date than that set in the plan, and therefore the options did not expire 90 days after the termination of the employment.