Your company has granted you stock options. Now what? This article explains the essential facts that you must know to understand your stock options and make the most of them.
Stock options aren't just for the folks on mahogany row any more. But turning stock options into the real green stuff takes some know-how. You need to know certain features of your grant to decide when to exercise your options and sell the stock.
Stock options are a major element of your long-term incentive compensation, offering tremendous potential to accumulate personal wealth. Given your stock options' complexity, it’s essential to develop a strategy to realize their full potential.
Get a sense of what you should, and should not, expect in the terms of your stock option grant. A major survey of companies looks at trends in vesting schedules, post-termination exercise rules, and other plan features.
You cannot cash in your stock options immediately. The options must first be vested, and you don't own them forever.
Avoid the mistakes others made with options during past ups and downs in the stock markets. Situations where common errors tend to arise can be classed into nine categories, including option-term expiration, job termination, corporate mergers, financial planning, and various life events.
Avoid the mistakes others made during prior ups and downs in the stock markets. Common errors arise in nine different situations, including job termination, mergers, financial planning, term expiration, and various life events.
Exercising stock options is like playing a hand of cards: if your plays are strategic, you'll probably "know when to hold them and when to fold them." But, as always, rules and regulations apply to what you can do.
myStockOptions.com Editorial Staff
PowerPoint presentation (in PDF) that the editorial team of myStockOptions.com developed to provide a convenient crash course on the basics of nonqualified stock options. (Premium members may request permission to use it at their companies.)
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You should know the answers to the following questions. Understanding the topics involved will help you make the most of your stock options and prevent costly mistakes...
A nonqualified stock option, or NQSO, is a type of stock option that does not qualify for...
You have income upon exercise of an NQSO...
You are taxed when you exercise nonqualified stock options and thus acquire the underlying shares of your company's stock. The difference between the market price of the stock at exercise and your exercise price is...
Your employer will include the amount of the spread at exercise of an NQSO on...
Yes. The spread at exercise is treated as wages and requires...
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