[stanleydrew]

This is roughly correct. The 90-day exercise window isn't just something made up out of thin air to handcuff employees and keep them from leaving.

It's explicitly written into the tax code that an option must be exercised within 90 days of leaving a company if the option is to be treated as an ISO. ISOs are arguably more advantageous than NSOs, which is why this is the default.

[dlubarov]

A workaround is to convert ISOs to NSOs after 90 days. Quora adopted that policy a while ago and a lot of companies followed suit (Square and Pintrest to name a few). Sam A now recommends that approach - http://blog.samaltman.com/employee-equity

[randominternets]

That sounds suspect to me. The company I work for gives 90 days + 1 month for every 1 month over a year you work there (so work there 2 years and you have 1 year, 90 days to exercise after leaving).

Is this arrangement just a loophole?

[phamilton]

Do they keep you employed for that month? It's fairly common to extend your termination date for health insurance and visa reasons. If you aren't actually terminated, the 90 days wouldn't have started.

[naedish]

The sentence was slightly hard to parse so you may have missed that you get an extra month for each month you are employed over 1 year. So the stated example of a 2 year tenure gives 1 year and 90 days to purchase the options.

[phamilton]

Indeed, I parsed it incorrectly.

[hkmurakami]

You likely have a clause where they become NSOs after 90 days.