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Employee Stock Options – Questions to Understanding Your Plan (part 3)

Employee Stock Options – Questions to Understanding Your Plan (part 3)

Image Credit: Philip Taylor PT

Today we are wrapping up the 3 part series of questions to understanding your option plan. These last four questions will go over strike pricing, statements, holding time and exercising your options.

Strike price – what is it and why do I care?

The strike price is a crucial aspect that essentially determines the value of the stock. Along with the expiration date, it is determined at the time of the grant.  This is important because it is the price you are paying for your options.

Are there certain forms I need to fill out? Will I get statements?

Getting statements really depends on your company. Some companies will update the employees on the status of the stock and others won’t.  There are different forms to fill out if you are reporting these options to the IRS or including them in your tax returns.

Do I have to hold my shares after an IPO, merger or acquisition?

In most cases the lock up time for holding on to your shares after an IPO is 180 days. That can vary slightly from company to company. The same holds true for mergers and acquisitions. Beware that you cannot sell your shares during this time and the value of the stock can change while in lock out.

How do I go about exercising my options?

It can be done is 5 steps but you must make sure all the details are covered. First check the current fair market value: are you comfortable buying your shares at the current value? Check your paperwork and make sure all your ducks are in a row. Then, make sure you know how many shares you would like to purchase. Make the trade, and decide if you want (and can) sell right away or you want to hang on for a while.

Do you have any questions about your employee stock options plan? Give us a call, we specialize in dealing with stock options!

Stock Connections specializes in working with San Francisco Bay Area companies that are involved in mergers & acquisitions, are raising capital, or creating stock option or other equity plans. We help start-up, private and public firms become – and remain – SEC-compliant. Stock Connections’ services are designed to help both start-ups and established firms comply with SEC and other regulations in their equity compensation programs. If you or anyone you know is looking to get involved with any of the above, we encourage you to contact us today!

 

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