Employee Option Pool Calculator
How many new shares an option pool needs and what it costs the existing holders. The arithmetic is circular, since the new shares are part of the total they are a percentage of, and getting that wrong undersizes the pool every time.
Also called: esop pool calculator, option pool sizing.
8,88,889 new shares to reach a 10% pool, diluting existing holders by 8.16%. Issuing 10% of the current count instead would give a pool of only 9.09% of the enlarged company. The new shares have to be divided by one minus the target, not multiplied by it, because they count toward the total they are a share of. The plan of 20 hires at 0.3% each uses 60% of the pool, leaving room for refreshes and for the grants that were not planned.
An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.
Pool size against dilution
| Target pool | New shares | Dilution |
|---|---|---|
| 5% | 3,15,789 | 3.06% |
| 7.5% | 5,94,595 | 5.61% |
| 10% | 8,88,889 | 8.16% |
| 12.5% | 12,00,000 | 10.71% |
| 15% | 15,29,412 | 13.27% |
| 20% | 22,50,000 | 18.37% |
How this is calculated
A ten percent pool means ten percent of the company after the pool exists, not ten percent of what exists now. Issuing ten percent of the current count gives a pool of nine point one percent of the enlarged company, which is the mistake this page exists to prevent: the new shares have to be divided by one minus the target rather than multiplied by it. The page also checks the pool against the hiring plan, because a pool sized by convention rather than by the grants it has to cover is either short within a year or dilutive for no reason.
the new shares must be a target share of the enlarged total, not of the current one, which is why the denominator is one minus the target- q
- Shares outstanding
- t
- Target pool share
- e
- Existing pool share
Method and limits
What it assumes
- Grants expressed as a percentage of the fully diluted company at the time of grant.
What it deliberately does not model
- Refresh grants, leaver forfeitures returning to the pool and repricing all change the real consumption rate.
- A pool created before a funding round dilutes existing holders alone, which is a negotiation rather than arithmetic.
Formula version 1.0.0 · definition 1.0.0 · India · Report a problem with this calculator
Frequently asked questions
- Why is issuing ten percent not a ten percent pool?
- Because the new shares count toward the total. Ten percent of the current count becomes about nine point one percent of the enlarged company, so the shares must be divided by one minus the target instead.
- How big should a pool be?
- Big enough for the grants planned before the next round, which is what the hiring check here is for. Sizing by convention alone leaves the pool short or dilutes for nothing.