I don't know if this is the correct place to ask, but I thought I would give it a try. It has to do with stock options being given to employees. We are trying to figure out if there is any liability on our part for a situation with an ex-employee.

All of our employees receive stock options, with a vesting schedule. During a staff meeting (8 ee's) the President announced that the company would allow a one-time opportunity for ee's to pay $0.05 per share (value is $1.00) and have the shares vested immediatly. He stated that everyone would receive a letter shortly outlining the details of the offer, and that people would have 2 weeks from which to reply.

An employee left (on good terms) and now claims that she never received the offer letter and has threatend legal action. As best as we can determine, it appears that she did not recieve the letter/offer. In discussing this internally, our president is essentially saying "too bad" for her. Some of us are concerned that there might be possible liability/risk on the organizations part. Any thoughts or comments? Thanks.

Besides your concern of liability because of the employee, you should be concerned about the grant of discounted stock options. The facts of your post are not clear enough to tell if there are issues, but if your company granted discounted stock options, I assume you consulted legal counsel first because of the securities, tax, accounting and 409A implications of this. I recommend you consult that same legal counsel about your potential "liability".

Yes, we did have an attorney do the original work, but I do not know to what extent an attorney was used for the scenario described above. The president of the company is somewhat hardheaded and likes to do things his way, whether it is right or wrong. That aside, what else do you need to know to help clear up my posting?

Not to complicate matters, but I have to ask:

Are you sure the ability for the employees to purchase shares at a discounted price was offerred via stock options and not an Employee Stock Purchase Plan?

What you are describing sounds more like an employee stock purchase plan. Of course that has all kinds of complications and issues as well.

Sorry about the confusion, but I too am a little confused by the whole thing. Our document is entitled "Stock Option Plan", with the following; Option Grant section, "an option to purchase, showing the number available, and the par value of $1.00. The Option Price is determined by bod as $0.05, Vesting being 18 mos for 50%, 36 mos for 100%. The special deal spoken about in the earlier post was that "each employee could give the company money ($0.05 x each share) and the vesting would then be 100%. Hope this helps.