The price at which the options are bought.
There are two broad models for this.
Model 1 is the par value of the share. This does not apply in legal terms in the case of Phantom grants. Phantom grants have a nil Strike Price.
Model 2 is linking the strike price to the fair value of the shares at the time the grant is made. The discount may range from 0% to whatever the company determines. 25% to 40% would be a good number. It works well both for the employee and the company.
Companies may grant a lower number of Options in Model 1 or a higher number of Options in Model 2. In Model 1, the employee has a higher chance of making a return. This becomes fairly attractive in late stage companies because the employee knows that there is a high likelihood of making something out of the Options. In Model 2, if the company does well, the employee may actually make a much higher return.