A grant letter that states only a number of options and a vesting schedule leaves the recipient to discover the exercise cost, the leaver window and the tax later, usually at the worst moment. The plain-language explainer in this document is not decoration — it is what makes the grant function as the retention tool it is meant to be.
Grant Letter
Share options — award and acceptance
A grant letter that states only a number of options and a vesting schedule leaves the recipient to discover the exercise cost, the leaver window and the tax later, usually at the worst moment. The plain-language explainer in this document is not decoration — it is what makes the grant function as the retention tool it is meant to be.
| Item | Detail |
|---|---|
| Company | [COMPANY NAME], UEN [UEN] |
| Scheme | [SCHEME NAME], adopted [DATE] |
| Participant | [NAME], [JOB TITLE] |
| Residency status | [Citizen / Permanent resident / Work pass holder] — relevant to the deemed exercise rule |
| Grant date | [DATE] |
| Number of options | [NUMBER] |
| Exercise price per share | S$ [AMOUNT] |
| Total cost to exercise in full | S$ [AMOUNT] |
| Vesting commencement date | [DATE] |
| Vesting schedule | [25]% after 12 months, then [monthly] over [36] months |
| Fully vested on | [DATE] |
| Expiry date | [DATE] |
| Post-termination exercise window | [90] days |
| Acceptance due by | [DATE] |
Letter
[COMPANY NAME] Date: [DATE] Private and confidential
[PARTICIPANT NAME], [JOB TITLE]
Dear [FIRST NAME],
Grant of share options
I am pleased to tell you that the [Board / Remuneration Committee] has granted you [NUMBER] options over ordinary shares in [COMPANY NAME], under the [SCHEME NAME].
[ADD A SENTENCE ON WHY — what this recognises and what the company hopes it means. A grant delivered as a bare table is remembered as an administrative event.]
Your grant
| Term | Detail |
|---|---|
| Options granted | [NUMBER] |
| Exercise price | S$ [AMOUNT] per share |
| What it would cost to exercise all of them | S$ [AMOUNT] |
| Vesting commencement date | [DATE] |
| Vesting | [25]% vests on [DATE]; the remainder vests [monthly] over the following [36] months |
| Fully vested | [DATE] |
| Expiry | [DATE] — options not exercised by this date lapse |
| If you leave | Unvested options lapse. Vested options may be exercised within [90] days |
| [Performance condition, if any] | [DESCRIBE] |
Vesting schedule
5 more pages in the Word file
This is page 1 of the Word document, exactly as it appears when you open it. Fields shown like THIS are placeholders for you to complete.
These notes accompany the template and explain the drafting choices, the compliance points and the mistakes most often made with this document. They appear as a final page in the Word file, intended to be deleted before the document is executed.
Employees consistently overvalue options, underestimate the exercise cost, and are unaware of the leaver window and the tax. A grant that is not understood generates no retention benefit and produces resentment at exit. The explainer costs three pages and is the most valuable part of this document.
The grant table states what exercising all the options would actually cost. Recipients rarely calculate it themselves, and it changes how they think about the grant — usually for the better, because it makes the instrument concrete.
A non-citizen who leaves Singapore holding unexercised options may be deemed to have exercised them, producing tax on a gain never received in cash. Telling them at exit, in a tax clearance directive, is far too late. Section 7 of the explainer says it plainly and tells them to take advice before resigning.
A departing employee has three months to find real money for shares with no market. Many cannot, and options earned over years simply lapse. Consider a longer window, or an extended window for long service. If the company keeps ninety days, at least be clear about it up front — the explainer is.
Recipients frequently assume their percentage is fixed. It is not. Section 6 states it directly, which avoids a difficult conversation after the next round.
Where the letter and the scheme rules differ, the rules prevail — and the letter should say so. Grant letters drafted from a template that has drifted from the current rules create genuine ambiguity about what was granted.
Whether the participant is a citizen, permanent resident or pass holder determines whether the deemed exercise rule can bite. Capturing it at grant means the company knows which participants need early warning when they resign.
The acceptance wording confirms the participant understood the key features. That protects the company against a later claim that options were presented as guaranteed money, and it forces the participant to engage with the terms.
Grants left unaccepted for months create uncertainty in the register and in the fully diluted cap table. Thirty days is ample.
Where an employee has been with the company for some time before a scheme is formalised, backdating the vesting commencement date recognises service already given. It is common, legitimate, and should be stated expressly rather than implied.
Every grant must be recorded with its terms. The register feeds the Directors’ Statement disclosure, annual income reporting, tax clearance and every financing diligence. Grants recorded only in signed letters in a folder are the pattern that causes problems later.
The closing line of the letter invites questions and says none is too basic. Most recipients will not ask otherwise, and the ones who most need to ask are the ones least likely to. The question list in section 9 exists to give them a starting point.
Granting options shortly after a funding round, when the share price and cap table are known, lets you explain the position concretely. Granting in the middle of a round, when everything is about to change, makes the explanation impossible and the grant less meaningful.
Describing a grant as being worth a particular sum, or offsetting it against salary in a hiring conversation, sets an expectation the company may not meet and is the source of most equity-related grievances. State the number, the price and the terms; let the recipient value it.
Reflects Singapore law and practice current as of {{DATE OF USE}}. The tax treatment of options, the deemed exercise rule, reporting requirements and tax clearance obligations all change — have grant documentation reviewed by a tax adviser, and confirm the current position before any grant to a non-citizen employee.
This is a ready-to-use template provided for convenience. Laws and requirements change, and every situation is different — please have it reviewed by a qualified professional (a lawyer, corporate secretary, or accountant as relevant) before you rely on it.