What is it:
An award agreement is the document that sets out the terms of one specific equity grant made to you: the type of award, the number of shares or units, the grant date, and the vesting schedule. If the agreement is for a Stock Option, the strike price, the option type, and the option expiration date are also included. It is issued under your company's plan document, which sets the rules for every award the company makes, and it incorporates that plan by reference. For option grants, the agreement often opens with a one-page grant notice listing your grant’s specific details, followed by standard language the company uses for grants like yours. You typically sign or electronically accept the agreement, often by accepting the grant notice.
Why does it matter:
This is the contract for your grant, so it's where your actual terms live. An offer letter can describe a grant, but the grant itself is made when the company's board or compensation committee approves it, and the award agreement is the record of that grant. Details that change what a grant is worth to you, such as whether your options are incentive stock options (ISOs) or non-qualified stock options (NQSOs), what happens to unvested awards if you leave, and whether vesting can speed up in an acquisition, are confirmed here or in the plan it points to.
What do people most often get wrong:
People often assume that any document describing their grant is the binding agreement. An award letter might be the agreement itself or simply a cover letter announcing the grant, and a summary on an equity account website may leave out terms that matter. The test is not the title, but whether the document names your specific grant, refers to the company's plan, and is the one you're asked to accept.