Drafting securities: Glossary of supported fields

Name*

Enter or select the full name of the stakeholder (person or entity) receiving this security.

Email*

Include the stakeholder's email address, (preferably their personal email) or the email of their appointed individual with power of attorney. For minor stakeholders (under 18), enter the email of their legal guardian. 

Stakeholder type*

Select the most appropriate option that defines the stakeholder—either Individual for a person or Non-individual for an entity (e.g., a trust or fund). This choice can impact how income, taxation, and regulatory considerations apply.

Relationship*

Select the stakeholder's relationship to your organization. This choice is essential for stock compensation expense accounting, helping to determine whether the award expense falls under ASC-718 or 505-50.

Grant reason

Specify the purpose of the award in order to expedite approvals and maintain accurate records.

Custom ID

Optionally, enter a unique identifier for the security. If left blank, the system will automatically increment from the last issued security of that type.

Type*

*Option grants only

Choose between the two primary types of option grants: ISOs and NSOs. ISOs offer tax advantages but have specific eligibility criteria, whereas NSOs provide flexibility with distinct tax implications.

Quantity*

Enter the number of shares attached to the security.

Exercise price*

*Option grants only

The specified amount that an employee pays to purchase one share of company stock when they decide to exercise their rights. It's usually based on the fair market value (FMV) of a share when the employee receives their grant and determined through a 409A valuation.

Currency*

Select the currency for the security price.

Board approval status*

Select Pending board approval to initiate the approval process on Carta.

Board approval date*

*For board approved equity awards

Enter the date your board officially signed a consent approving the issuance of equity. In most cases, this date should precede or coincide with the issue date and follow the vesting start date (if there is one)

Grant date*

*For board approved equity awards

Enter the date when the stakeholder officially received the security from your company, which must be today or a date before today. Typically, the issue date coincides with or follows the board approval date and comes after a vesting start date.

Expiration date*

Beyond this date, the recipient loses the right to exercise their options or convert their RSUs into actual company shares.

Vesting start date*

*Mandatory for securities with a vesting schedule attached

The date when the security begins vesting. This is typically the same as the employment start date for new hires, and should be on or before the board approval date.

Vesting schedule*

Select one of your vesting schedule templates from the dropdown, which determines when and how the security becomes available to the stakeholder. To add a custom schedule to a security, select + New vesting schedule and follow these instructions.

Documents*

Choose one or your predefined document sets from the Templates page or select + New documents to attach relevant paperwork to the security.

Exercise legend*

*Option grants only

Optionally, attach a legend to provide information about the terms and conditions of the grant.

Early exercise*

*Option grants only

Indicate whether the holder will have the right to exercise options before the stock is fully vested. Early exercise can provide potential tax benefits and allows employees to become shareholders sooner.

Acceleration terms

Select from your predefined acceleration terms on the Templates page to describe conditions when vesting can be accelerated, or click to enter New terms.

Exercise periods*

*Option grants only

Indicate the PTE periods for the security, or the time after an employee’s departure when they can exercise their options before they expire. For Custom exercise periods, enter values accordingly on the right.

Federal exemption*

Choose the appropriate exemption to ensure regulatory compliance, based on the type of security, investor qualifications, disclosure requirements, etc. For additional guidance, consult your legal team.

State exemption

Refer to your counsel for guidance on state exemption.

State of residency

The state where the stakeholder receiving the equity resides.

Employee ID

This field helps maintain synchronization and accurate record-keeping between Carta and your HRIS.

Cost center

Use this field for accounting and financial reporting purposes. We recommend using a standard format of the GL account number followed by the department title, e.g., “6500 - Sales and Marketing”

Job title

If applicable, the job title of the stakeholder who is receiving the equity.

Annual salary

If applicable, the annual salary of the stakeholder who is receiving the equity.

Notes

Use this field to include any additional remarks or notes related to the security.