Stock options

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Obtenor_sl

shitlord
483
0
Hey Guys,

Question for you guys who know more about this shit, I got an email from my CFO saying that I was awarded stock options in the company, 200 shares at xxx price. With some vesting shit to them. Something like 25% in 12 months and the rest in 36 months. How does this work? Do I have to pay for them up front? I've read some websites that say that you pay is WHEN They vest.

Anyone has info on how this shit works?
 
W

Wuyley_sl

shitlord
1,443
13
If I remember right you are now "locked in" to buy 200 shares of stock from your company at xxx a piece. Vesting means that those options are yours no matter what. Now you actually get 25% of those options in 12 months, and the rest in 36 months. At those times you are allowed to sell your stock at whatever price they are currently at even though you only "paid" xxx. You do not have to pay for your options not rather you pay for them when you "sell" them so if xxx was $10 and 36 months from now the market price on your companies stock is $15. You can essentially sell a share of stock at $5 a piece profit. Now I am sure there are probably some fees for doing so but not sure. You don't really ever buy it, the company more or less holds on to them for you until you choose to sell them.
 
Borzak

Borzak

Bronze Baron of the Realm
24,618
31,951
I don't think you can do it anymore but at Dow Chemical you used to could sell your options to other employees. My uncle pretty much retired a multi millionaire simply buying stock options from people who wanted instant money. I know not related, but I know lots of people who never take the options even in companies that are doing well which I never understood.
 
Elerion

Elerion

N00b
735
46
Obtenor_sl said:
Hey Guys,

Question for you guys who know more about this shit, I got an email from my CFO saying that I was awarded stock options in the company, 200 shares at xxx price. With some vesting shit to them. Something like 25% in 12 months and the rest in 36 months. How does this work? Do I have to pay for them up front? I've read some websites that say that you pay is WHEN They vest.

Anyone has info on how this shit works?
Click to expand...
Without knowing specifics (and option agreements can vary quite a lot, especially across jurisdictions), this is how it probably works:
[Note: I'm assuming tax laws are similar to Norway here. They may differ.]
1. You currently have 200 unvested options in your company's stock, which are probably nontransferable. You don't pay anything now, and you don't pay taxes on it either.
2. In 12 months, you will be able to exercise 50 of these options (buy 50 shares at X price). At that point you pay the company 50*X and receive the shares. You can sell these at any time, at which point you will be taxed on the gains (Sale price less 50*X).
3. In 36 months, you will be able to exercise 150 of these options (buy 150 shares at X price). See 2.
4. Depending on option structure, you may have to exercise the options immediately when they vest, or else you lose them. However, you may be able to delay exercising the options. If so, there will be a limit to how long you can delay exercising them. Generally, you should always delay exercising the option as long as possible.

If the options are transferable, you will pay a tax on the sale value when you sell them.
 
O

Obtenor_sl

shitlord
483
0
Elerion_sl said:
Without knowing specifics (and option agreements can vary quite a lot, especially across jurisdictions), this is how it probably works:
[Note: I'm assuming tax laws are similar to Norway here. They may differ.]
1. You currently have 200 unvested options in your company's stock, which are probably nontransferable. You don't pay anything now, and you don't pay taxes on it either.
2. In 12 months, you will be able to exercise 50 of these options (buy 50 shares at X price). At that point you pay the company 50*X and receive the shares. You can sell these at any time, at which point you will be taxed on the gains (Sale price less 50*X).
3. In 36 months, you will be able to exercise 150 of these options (buy 150 shares at X price). See 2.
4. Depending on option structure, you may have to exercise the options immediately when they vest, or else you lose them. However, you may be able to delay exercising the options. If so, there will be a limit to how long you can delay exercising them. Generally, you should always delay exercising the option as long as possible.

If the options are transferable, you will pay a tax on the sale value when you sell them.
Click to expand...
Awesome answer, very informative; Thanks.

Yeah, I think we're going to IPO or something, dunno. So might be good to hold on to them
 
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Philip23_sl

shitlord
7
0
Elerion explain ii in descriptive way very informative. Thanks to you my grand pa is also buy stock and he has sound knowledge about that. Now he passes retired life and have handsome amount to pay the fees of his old age living home.
 
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