But the savvy candidate should determine whether the grant is competitive in terms of the percentage of the company the shares represent. A grant of 75,000 shares in a company that has 200 million shares outstanding is equivalent to a grant of 7,500 shares in an otherwise identical company with 20 million shares outstanding. In the example above, the manufacturing engineer's grant represents 0.038 percent of the company. Although stock options can be used as incentives, the most common types of options grants are annual grants and hire grants. An annual grant recurs each year until the plan changes, while a hire grant is a one-time grant.
Some companies offer both hire grants and annual grants.
Recurring annual grants are usually paid to more senior people, and are more common in established companies where the share price is more level. In startups, the hire grant is considerably larger than any annual grant, and may be the only grant the company offers at first. When a company starts out, the risk is highest, and the share prices is lowest, so the options grants are much higher. Over time, the risk decreases, the share price increases, and the number of shares issued to new hires is lower. For example, in a company where the CEO gets a hiring grant of 400,000 shares, the option grants might look like this.