---
title: "What Is Plan Limit?"
term: "Plan Limit"
description: "A plan limit is the maximum number of shares or dollar value authorized under an equity incentive plan—options, RSUs, or other awards—that the company can grant without amending the plan."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/plan-limit
---

# What Is Plan Limit?

> A plan limit is the maximum number of shares or dollar value authorized under an equity incentive plan—options, RSUs, or other awards—that the company can grant without amending the plan.

**Plan limit** is the authorized cap on shares (or total award value) that a company's equity incentive plan may grant under its approved documents—typically set when the plan is adopted and increased only with stockholder consent.

### How it works

The board adopts an equity incentive plan with a share reserve—say, 10% of fully diluted capitalization at adoption. Each option, RSU, or other equity award draws down that reserve. Finance and legal track "available to grant" versus outstanding and exercised awards. When the reserve nears zero, the company proposes a plan amendment or pool increase, often bundled with a financing round.

Investors model plan limits alongside [option pool](/glossary/option-pool) targets. A round term sheet may require expanding the pool to a post-money percentage, which must fit within an amended plan limit after stockholder vote. Grant dates cannot exceed available shares; systems like Carta or Pulley flag shortfalls before board approval.

### Why it matters

- **Founders:** Promising candidates options you cannot legally grant damages recruiting credibility and may require emergency stockholder meetings.
- **Investors:** Plan limit history reveals whether prior rounds left enough headroom for hiring through the next milestone.

### Common mistake

Confusing the plan limit with the option pool percentage in a term sheet. The term sheet target must be implemented via plan amendment, board resolutions, and accurate fully diluted math.

### Related ideas

See [equity incentive plan](/glossary/equity-incentive-plan), [option pool refresh](/glossary/option-pool-refresh), and [cap table](/glossary/cap-table) hygiene.

## FAQ

### What is plan limit in simple terms?

It is the ceiling on how much equity your incentive plan can issue. Once you hit the limit, you need stockholder approval to increase the pool before granting more options or RSUs.

### Why does plan limit matter?

Running out of plan capacity mid-hiring cycle delays offers and signals poor cap table hygiene. Investors often require a pool refresh at financing that stays within documented plan limits.


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Source: https://venturecapitaltracker.com/glossary/plan-limit