No. The exercise and the sale are separate. Whether you sell the shares at the time you exercise stock options depends on various factors. At exercise, you can usually hold the shares or sell some or all of them.

The factors that influence your decision about whether to sell shares at exercise include the following.

  • Exercise methods available to you through your company's stock plan.
  • How you plan to pay the costs of exercise and any taxes.
  • Tax planning, particularly if you have incentive stock options. Whether you hold the shares, and for how long, will affect your taxes.
  • Your needs for the cash proceeds and other financial-planning goals, such as diversification.
  • Whether your company is publicly traded or privately held. In a privately held company, you will not be able to sell the shares immediately at exercise because of restrictions that are likely to exist in your grant, and/or because of the SEC rules on resales.
Alert: You should confirm that you have certified an IRS Form W-9 or Form W-8BEN for the account with your brokerage firm or transfer agent. If it does not have this form, you will be subject to backup withholding on the sales proceeds.