Option Pool
A pool of share capital set aside for employees which is allocated to them through a Share Optionscheme (such as an EMI Scheme). Option Pools commonly represent 5-10% of the overall share capital of a company (but can be more). Early stage investors will often try to agree that the percentage shareholding they get for their investment is based not only on all of the issue shares and options, but also on a Fully Diluted basis (i.e. on the assumption that all shares in the Option Pool have been issued). As a result of this, the Founders‘ percentage shareholding is Diluted when the Option Poolshares are issued – but the protected investor’s shareholding isn’t.