The Stockholder Approval of Equity Incentive Plan is one of a group of documents that allows the stockholders of your startup to formally sanction or approve a “resolution” of your startup’s board of directors. A resolution is a decision or objective that has been voted on (and was agreed to) by your startup’s board members. A formal sanctioning or approval from your startup’s stockholders is generally reserved for important or significant board resolutions – examples of this sort are the approval of an Equity Incentive Plan, and the indemnification of a given individual or entity by your startup. Many less-impactful decisions involving your startup will be discussed and voted on by board members (replacing a non-critical vendor or changing the appearance of your employees’ uniforms might qualify), however those votes should not require formal sanction from stockholders.
A Stockholder Approval of Equity Incentive Plan authorizes the adoption of the Equity Incentive Plan (Exhibit A). The Equity Incentive Plan calls for a given number of your startup’s shares of Common Stock to be reserved for issuance, and for your startup’s officers to take whatever legal steps are necessary to facilitate this process.