What is the logic of employee stock options expiring (say unexercised, fully-vested stock options granted ten years ago)?
I believe the main historical reason is that tax-advantaged stock options — so called “ISOs” — have a maximum 10-year term under the tax code.
A smaller, but related issue even for NSOs is that the longer the term, the more valuable the imputed value of the option, and the higher the (non-cash) compensation charge the company has to take.
Many of these issues are being re-thought, as the tax advantages of ISOs are harder and harder to take advantage, and companies wait longer and longer to IPO.
RSUs (stock grants often with no exercise price), more NSOs vs. ISOs (more flexibility for NSOs), etc. are becoming more common as the traditional benefits of ISOs fade have become outweighed in many cases by their limitations.
Image from this great article here: 10-YEAR EXPIRATION of INCENTIVE STOCK OPTIONS (ISOs)