This workout asks us to identify the key features of the stock option plan below, including the strike price range, the vesting period, and the number of stock options outstanding at the end of 2019. Number of awards are shown in millions, so the purpose of this workout is the better understand the disclosure of stock options and some of the terminology frequently used. We are being provided with two excerpts from a company set of accounts. This company is called HelloFresh and they operate as a food delivery service company. Okay, so let's have a look at the information. The first table shows some information about the options that have been granted to the employees. The key information I want to focus on here is the exercise price range, the 8.12 to 18.6. This is shown in Euros, and I can grab these two numbers and enter them as the maximum and the minimum strike price.

Remember exercise price and strike price are used interchangeably. So you might be asking why is there a range in this price? Well, the company is continuously granting new options at different time periods, and each set of options granted have specified exercise prices. So for example, our company may grant 1 million options in January as an exercise price of nine Euros, and then six months later another 1 million options. But at a higher exercise price of 12 Euros, the company will usually set their exercise price at a slightly lower price than the share price at market value. This gives the employees the incentive for the shares to grow. This explains the range in the exercise price. Next, we want to source the vesting period. This is a service-based condition, meaning the employees must provide a set number of years of continued service to the company before the options vest. This is known as a vesting condition, and we can see in our example at the top that this is four years of service. So in this example, the company have actually labeled this the expected term.

Finally, we need to source the number of options outstanding at the end of 2019.

We need to look at the information on the right here, and we are being provided with four pieces of information, number of awards outstanding at the beginning of the period granted during the period. So how many options did this company grant this year. Forfeited during the period. So if employees have left the company before the vesting period has passed, they must forfeit or surrender their options. And this tells us how many were forfeited, number of awards outstanding at the end of the period. This is the number we want, and it's 2.6 million.

This number is useful in the context of valuation and calculating the diluted number of shares outstanding. Okay, so some key points to note, although not detailed in the workouts, it's interesting to note that the share price at the end of the fiscal year was below the strike price, meaning that the options are outta the money. However, the options still have a fair value above zero. Although we aren't going to discuss option valuation here, the fact that there are four years until the options can be exercised means that there is still a probability that the share price will exceed the exercise price by the vesting date. And the fair value of these options reflects that potential for the share price to increase between the grant date and the vesting date.