The Exercise price is the set price at which the right is offered to an employee to buy a certain number of shares. There is no particular rule around setting the exercise price as it is subjective to the organization and its founders. However, it is recommended for founders to set the exercise price as low as possible (at least till the completion of Series A round of funding). Post Series A round, the business is somewhat established. It is then that founders should increase the exercise price by some factor. However, it is recommended that exercise price should not reach face value; this is done so that employees can have some more upside on their ESOPs.