Early Exercise Stock Options
In the first part of this four-part series, we provided a high-level summary of stock option basics. In this second installment, we build on those basics and begin our exploration of stock option program “enhancements” by...more
Deadlines are approaching for employers to report employee exercises of incentive stock options and employee stock purchase plan purchases during 2022. Corporations that offer incentive stock options (ISOs) or maintain a...more
Share-based compensation is the most popular reward method among employees and service providers in many industries today, especially the high-tech industry. From the grantee’s point of view, the receipt of options enables a...more
Given recent market trends, many private companies have seen valuations decline significantly, resulting in an increasing number of service providers holding “underwater” or “out of the money” stock options. As a...more
Companies frequently consider whether to grant a stock option with the ability to exercise the option before it has vested, which is considered an “early exercise” right. In this episode of "Just Compensation", hosts Andrew...more
We are often asked by our private company clients about making changes to outstanding stock options. In some cases, changes to the number of shares subject to an option are needed, or to the vesting schedule, or to the...more
From time to time, and primarily when the economy is booming, allowing stock options to be “early exercised” - that is, allowing options to be exercised before they are vested - becomes in vogue. We are in one of those times....more
On March 12, 2018, the United States Securities & Exchange Commission (the “SEC”) fined a late-stage private company $160,000 as a result of its failure to comply with the enhanced disclosure requirements of Rule 701 in...more
Pinterest did it. Square did it. And Coinbase did it, too. These unicorns have all given departing employees more than the standard 90 days to exercise their stock options. They’ve extended the window to exercise options for...more
Options, warrants, convertible equity and convertible debt are all familiar tools of corporate finance. Taxing LLC Options covers the federal income taxation of non-compensatory options (NCOs) issued by partnerships and LLCs...more
Congress enacted Section 409A of the Internal Revenue Code in 2004. Given the statute’s complexity, the expense associated with compliance and its iron-fisted results, I’ve been amazed that there hasn’t been a greater clamor...more
The U.S. Treasury Department recently released regulations on the tax treatment of noncompensatory options issued by a partnership, as well as proposed regulations addressing the threshold question of when a partnership...more