&quot;What it means is that when you leave your job, if you want to capture any potential upside from your options, you&#x27;re required to execute them, paying your own money for actual shares. Depending on the amount of equity you have, this may or may not be a meaningful amount of money, but it is in any case a painful decision to have to make.&quot;<p>Why is that a bad thing?  If not exercised, those options disappear, and essentially everyone else is not diluted.  If the options remain on the books, it affects everyone else.<p>Also, from a company perspective, that&#x27;s a rough go, because earlier shares tend to be worth quite a bit more (whether because of lower strike prices or whether the early employee got a bigger percentage of the company), so you end up with cases of someone who put in a year early on and left holding a significant portion of the company when people who stick it out for longer get much less.<p>Of course, in any case, the company can always issue more shared to dilute out the early shareholders who left, while dishing out the new shares to everyone who is still employed, but then you&#x27;re right back to square one.