What is a stock plan?
A stock plan is a formal document that contains the general rules of operation that are common to all plan participants. It is drafted by lawyers and approved by the board and, usually, the shareholders of the company.
The plan document usually sets forth general parameters and specific terms, such as who is eligible to participate, which types of stock grants (e.g. NQSOs, ISOs, SARs, restricted stock, RSUs, performance shares) can be awarded, the total number of shares available under the plan, procedures for making specific grants. and the circumstances in which the plan can be amended or terminated. Employee stock purchase plans are often set up under a separate stock plan.
Another FAQ discusses documents you must read to understand your company's stock plan and links to examples of stock plans at companies.