What are the differences between stocks, stock pool, shares?


1

Have read lots of different terms. I have no idea how they differ from one another.

Things like, 20% stock pool for employees, and 1 million stocks, etc.

Can someone enlighten me?

Thank you.

Venture Capital Shares

asked Mar 16 '11 at 14:22
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Victor
593 points
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2 Answers


2

The "capital stock" is the capital the company was founded with. It is divided up on individual shares. You could have found that on Wikipedia.

In day to day business speak it's common to use "shares" and "stocks" (note plural) as synonyms, i.e. they normally mean exactly the same.

The "options pool" is a number of shares which are earmarked / reserved for future employees. In other words, it's a pool of shares that will be used for share options for employees, as an incentive on top of their salary.

The key things to know about the options pool are:

In addition to the above link to Venture Hacks, you should also see their Excel spreadsheet for building a capitalization table. In general, go read lots of Venture Hacks articles, they're great.
answered Mar 16 '11 at 17:04
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Jesper Mortensen
15,292 points

1

Shares are synonymous with stock in the sense that both represent % ownership of a company/companies.

To understand stock pools you will have to know the difference between authorized shares and issued shares, and the concept of dilution.

20% ownership pool for employees refers to the percentage of the company reserved for employees (assuming full dilution).

answered Mar 16 '11 at 15:04
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Henry The Hengineer
4,316 points
  • Thanks for your reply. It helps. – Victor 8 years ago

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