How to self-serve an option agreement

Empowering colleagues to self-serve can help legal dedicate time towards the high-value work that matters. How do you do it?

This deep dive looks at what option agreements are, who they affect and why businesses use a self-serve workflow to manage them better. Use the navigation below to find out more, or explore our other contract deep dives, like NDAs and employment offer letters.

What’s an option agreement? | Who do they affect? | What’s the non-self-serve option agreement process? | Why use a self-serve workflow? | How to achieve self-serve for option agreements | Useful features | Learn more

What’s an option agreement?

An option agreement outlines the terms and conditions that give a party a right to buy an asset. The term ‘option agreement’ is used in many different contexts – from financial derivatives to property transactions – but where we see options agreements discussed most frequently is in relation to the contracts that startups and scaleups use to give share options to their employees. Option agreements for shares are a great way to give employees a stake in the company’s commercial success, and to align employee and business incentives. 

Option agreements distribute equity, but with limitations. Although a business might want the employees to have a degree of ownership, it most likely doesn’t want them to be able to exercise their options in the short term or to have voting rights, for example. This is usually why options tend to come with vesting cliffs.

Who do option agreements affect?

Option agreements affect various stakeholders across the business:

  • The legal team owns the template, working with external counsel when the employee option pool is established or changed.

  • The people team is responsible for distributing option agreements to new and current employees. They also work with legal to make changes to option arrangements as the business scales.

  • The CFO owns management of the cap table, so they’ll want to monitor the agreements closely. Leadership teams are responsible for this if the business doesn’t have a CFO.

  • The board of directors is interested in the specific details of ownership, especially when the business is preparing for an upcoming funding round.

  • New joiners are sent option agreements when they join. Existing employees might be granted additional option awards as they progress with the business

It’s hardly surprising that Word is also the go-to tool for contracts. But as part of a non-self-serve workflow, it creates more problems than solutions

What’s the non-self-serve option agreement process?

Most scaleups still agree and manage option agreements with a manual process that begins with a Word document and doesn’t allow teams to self-serve. Nearly every company uses Microsoft Word for its documents, so it’s hardly surprising that Word is also the go-to tool for contracts. But as part of a non-self-serve workflow, it creates more problems than solutions. The manual process looks something like this – 

People and talent teams download an option agreement from a Word template that’s stored on a shared drive and manually input information to tailor the contract to the employee it’s being sent to. Minor amendments don’t usually require legal approval, but if senior employees decide to negotiate the terms of the option agreement then the document bounces between the employee, the people team and legal until a compromise is reached. This clunky process makes version control a nightmare and involves lengthy email chains that delay the process and cause friction between teams. Eventually, the parties sign the contract and it’s saved as a hard copy in a filing cabinet, or stored on a shared drive as a PDF. 

Why use a self-serve workflow?

Keep up with the business

As commercial headcount skyrockets at a scaleup, the legal team won’t grow at the same rate. Without a process that allows teams to self-serve on contracts, legal teams can quickly get snowed under with legal requests. A contract collaboration platform that enables other teams to self-serve on option agreements will reduce legal’s involvement, meaning that as the business scales, they can get back to the tasks that matter. 

Unify your workspace

In scaleups, things change. But if your end-to-end contract lifecycle involves jumping between multiple systems – Word templates, email and phone call negotiations, internal team discussions in Slack, PDF conversion, wet signatures or eSignature tools – version control will be a major challenge. A workflow that enables self-serve keeps everything in a unified workspace, giving you a single source of truth, clear audit trail and a faster time-to-sign. 

Save valuable time

As the business headcount increases, so too will the number of option agreements you need to manage. It won’t be long before it becomes legal’s time is taken up answering the same questions over and over again, negotiating internally or digging through signed files. By optimizing your workflow and enabling other teams to take ownership of the contract process you can give legal their lives back and free up time for higher-value work. 

Get the ‘Modern contract handbook’ and discover what end-to-end contract collaboration looks like for a modern business.

How to achieve self-serve for option agreements

Self-serve is a matter of process. To create a frictionless self-serve workflow that empowers other teams in the business, you’ll want to do the following:

Work in an intuitive, design-first interface

An automation project requires cross-team collaboration, so there’s no point using a platform that only legal can understand. Find a contracts platform that places the end user at the heart of the system, so any of your colleagues can use it with minimal training.

Design the perfect template

Use the in-browser editor in your contract platform to create a visually engaging agreement that employees want to sign. Lose the legalese, get the most important information front and centre, and make your option agreement readable. Your template will be used to serve all your option agreements, so it needs to be perfect. 

Find a contract collaboration platform that offers in-browser collaboration, so everything from audit trails to version histories are saved in one place

Establish a Q&A flow

A Q&A flow allows people and talent teams to populate a template with key information by answering a few simple questions. This reduces risk of human error and saves time; if your colleagues can self-serve option agreements from templates, then legal can dedicate time towards the higher-value work they’ve been hired to do.

Negotiate in-browser

Employees might want to negotiate certain terms. But if these discussions take place in emails, Slack groups or over the phone, without an audit trail or version history, it defeats the point of self-serve. Instead, find a contract collaboration platform that offers in-browser collaboration, so everything is saved in one place.

Give legal oversight

People and talent teams might be empowered to serve their own option agreements, but you’ll still want legal oversight on the document before it’s sent for signing. An approval workflow will allow the legal team to retain approval rights before contracts are shared.

Useful features

  • Custom dashboards. In a contract collaboration platform like Juro, you can use the table view and filter option agreements by different information – like the number of options, signing status, vesting date, and so on.

  • Q&A flow. This enables the people team to self-serve watertight documents in minutes, reducing the risk of human error.

  • Approvals. An approval workflow will make sure legal and leadership teams have oversight of share option awards.

  • Date reminders. Use the reminders feature to stay one step ahead of key dates, such as approaching vesting deadlines.

  • Mass generation. Venture-backed companies will sometimes vary options at scale – by changing exercise rights or giving everyone an additional equity award. Being able to do this en masse, rather than individually, is a massive time-saver.

  • Mass signing. Similarly, the CEO signing all the option agreements doesn’t have time to work through them one by one. With a contract collaboration platform that has a mass signing feature, you can generate, approve and sign multiple contracts at once, in just a few clicks.

Empowering the team with Juro

Is managing routine contracts at scale a challenge for your SaaS business or marketplace, with friction pre-signature and a lack of visibility post-signature? If so, try Juro and see if you could benefit from a contract collaboration platform that enables businesses to agree and manage contracts all in one unified workspace.


Topics: Option agreement

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