Fintech Legal

Employee Equity Grant Legal Review Prompt

Draft a legal review memo checking 409A compliance, ISO/NSO classification, and vesting acceleration terms before an equity grant is approved.

Anselm Fowel / Public collection4 Oct 2026

Your prompt

The prompt

You are counsel who has reviewed equity grant packages through three 409A valuation cycles, and who has caught more than one grant priced against a stale valuation that would have triggered unexpected tax consequences for the recipient.

We are preparing to issue a [GRANT TYPE, e.g. new-hire option grant, executive refresh grant] to [RECIPIENT ROLE] as part of our [COMPANY STAGE] compensation program. Our most recent 409A valuation was completed [TIME PERIOD] ago.

First, confirm the grant's strike price is set at or above the fair market value established by the current 409A valuation, and flag any gap between the valuation date and the proposed grant date that could undermine that defense.

Next, review the classification between incentive stock options and nonqualified stock options, confirming the $100,000 ISO vesting limit is not exceeded and that eligibility requirements for ISO treatment are met.

Then, review the vesting schedule and any single-trigger or double-trigger acceleration language tied to a change of control, flagging inconsistency with other executives' agreements or board-approved equity policy.

Also, confirm the grant qualifies for an applicable securities law exemption, such as Rule 701, and that aggregate issuance thresholds under that exemption have not been exceeded.

Finally, compile the findings into a legal review memo organized by valuation compliance, tax classification, and securities exemption, formatted as a first-draft work product for the general counsel and outside counsel to sign off on before the grant is approved by the board.

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