Stock options are valuable compensation for startup employees. The high potential upside of these options motivates employees to turn down larger salaries at bigger companies and work at startups. It seems obvious, then, to expect that employees should own their vested options outright, even if they leave the company. Stock options are compensation for work that’s already been done. Returning them to the company when you leave would be inequitable.
Unfortunately, this is exactly what often happens. The industry standard stock option agreement gives employees 90 days after leaving a company to exercise their vested options, or they are returned to the company. Many employees don’t have the money to exercise their options within such a short window and lose them.