Glossary · Employee equity
409A valuation
A US tax rules concept: private companies get an independent valuation to set the “fair market value” for stock options so grants have a defensible strike price. Think of it as the paperwork behind option pricing.
Related: Stock options · Restricted stock
A bit more nuance▾
- This is **US-specific** (IRC Section 409A); other countries use different frameworks.
- Cheap or stale 409As can create headaches for employees and the company.
Go deeper▾
Discussion questions▾
- If you are not US-based, what is your local equivalent for option pricing?
- How often should a growing company refresh its valuation?
Educational reference only — not legal, tax, or investment advice. Terms vary by country and deal; ask a qualified professional when it matters.