---
title: "🌐 Stock Options"
canonical: "https://handbook.rocket.chat/space/PEOPLE/360088277/%F0%9F%8C%90%20Stock%20Options"
format: markdown
---
At Rocket.Chat, our stock options program is designed to **align everyone’s interests with one common goal: building a successful company.** It’s a way to motivate and reward Rocketeers for helping us reach that goal.

This guide explains stock options in simple terms. For full legal details, please refer to:

- The *Rocket.Chat Holdings, Ltd. 2016 Share Plan* (“2016 Share Plan”)
- Your stock option agreement

If you have questions before making any important decisions, you can always reach out to our **Operations team** and/or consult an **employment attorney or tax advisor.**


## :1: What Is a Stock Option?

A stock option gives you the **right (but not the obligation)** to buy Rocket.Chat stock at a fixed price (called the **exercise price**) set at the time of grant.

> ℹ️ Example:
> ℹ️ 
> ℹ️ - You receive stock options with an exercise price of **$1/share.**
> ℹ️ - Later, Rocket.Chat stock is worth **$20/share.**
> ℹ️ - You can still buy it for **$1/share.**

### **Why not just give stock directly?**

1. **Flexibility:** You don’t need to spend money upfront — you can choose if/when to buy the stock.
2. **Taxes:** If we gave you $10,000 worth of stock today, you’d owe taxes immediately. With options, you typically pay taxes only when you exercise them.

:WARNING: *Tax rules vary. This is a general overview. Always consult a tax advisor before acting.*


## :1: Types of Stock Options at Rocket.Chat

- **Incentive Stock Options (ISOs):** For US employees, with special IRS tax treatment.
- **Non-Qualified Stock Options (NSOs):** For contractors and non-US employees.

We use **Carta** to manage our stock option program. You’ll find all terms, conditions, and your specific grant inside Carta.

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## :check3: Three Conditions for Stock Options to Matter

For your stock options to be valuable, three things must happen:

1. **You must vest your stock** (1-year cliff + 3 years of monthly vesting).
2. **You must stay long enough** until Rocket.Chat has a **liquidity event** (IPO, acquisition) or have the cash to exercise after leaving.
3. **Rocket.Chat must increase in value** beyond the liquidation preference.

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## :CALENDAR: Vesting Schedule

**Vesting** means earning ownership of your stock options over time.

- Standard: **4 years total**
  - 25% after 1 year (the “cliff”)
  - Remaining 75% vests monthly over the next 3 years

### :DREAM:  The Cliff

The first 12 months are a “cliff.”

- If you leave before 1 year → no options vest.
- If you stay 1 year → you vest 25% all at once.
- After that → monthly vesting continues.

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##  :finance: The Exercise Window

Rocket.Chat stock is **not liquid** until an IPO lock-up period ends or the company is acquired.

- If you leave Rocket.Chat, you have **90 days** to exercise your vested options.
- During this window, you must pay the exercise price (and potentially taxes).
- Extensions may be considered only in exceptional cases (e.g., personal circumstances).

## :5: How to Exercise Your Options

Once your grant is approved by the Board, you’ll get an email from **Carta** with all details: number of shares, exercise price, vesting schedule, etc.

When you’re ready to exercise:

1. Contact Rocket.Chat’s **COO** and complete a *Notice of Share Option Exercise* (sent to you).
2. Sign and return it as a PDF.
3. Send payment in **USD via wire transfer** (info provided).
4. **For US residents only:** File an *83(b) election form* with the IRS within 30 days of exercise. Send a copy to the COO. (A template letter will be provided bellow.)


> ℹ️ *«Date Filed»*
> ℹ️ 
> ℹ️ *Department of the Treasury*
> ℹ️ 
> ℹ️ *«Address provided from 83-b instructions»*
> ℹ️ 
> ℹ️ *To whom it may concern:*
> ℹ️ 
> ℹ️ *Please find enclosed two copies of the 83-b election in connection with my purchase of shares of Rocket.Chat Holdings LTD common stock. Please return one copy stamped as received to my attention in the enclosed self addressed stamped envelope.*
> ℹ️ 
> ℹ️ *Yours Truly,*
> ℹ️ 
> ℹ️ *//signature*
> ℹ️ 
> ℹ️ Remember this was a quick walkthrough on Stock Options, and for more information about dilution, option expiration, exercise prices and 409A Valuations, and taxes, please check this [link](https://github.com/RocketChat/Rocket.Chat.Operations.Internal/blob/master/source/HR/Stock%20Options.md) (for a view with simpler terms), the full Rocket.Chat Holdings, Ltd. 2016 Share Plan (the "2016 Share Plan") or your stock option agreement (both for the full legal terms)!