Is Grant price the same as exercise price?

The grant price (also commonly referred to as the exercise price) is the amount you pay to the company for each share. This price is set by the company at the time the stock option grant is made (grant date).

Should I exercise my NQSO?

Conventional wisdom NQSO strategy: exercise early In fact, that’s the conventional wisdom strategy for NQSOs: exercise early to minimize the current tax hit and maximize the amount treated as hopefully lower-taxed long-term capital gain when you eventually sell the option shares.

What does it mean to exercise a grant option?

Exercising stock options means purchasing shares of the issuer’s common stock at the set price defined in your option grant. If you decide to purchase shares, you own a piece of the company. You’re never required to exercise your options, though.

Does exercising options create a taxable event?

ISOs are usually seen as more advantageous for the employee, in part because the exercise date isn’t a taxable event (though higher-earning employees have to make an alternative minimum tax, or AMT, adjustment based on the difference between the current market price and the exercise price).

What is the exercise price of a NQSO?

Example: Your NQSOs have an exercise price of $10 per share. You exercise them when the price of your company stock is $12 per share. You have a $2 spread ($12 – $10) and thus $2 per share in ordinary income.

How are NQSOs issued and when do they expire?

How NQSOs Are Issued. If the price of the stock rises or stays the same, then the employee can exercise the options at any time during the offering period. If the price of the stock falls after the grant date, then the employee can either wait until the price goes back up or allow the options to expire.

What is a non qualified stock option ( NQSO )?

What Is a Non-Qualified Stock Option (NQSO) – Types & Issuing Options Companies frequently choose to reward their employees with shares of their stock instead of cash or other types of benefits, such as a 401k or other qualified retirement plans.

When do you have to pay taxes on NQSOs?

Example: Your NQSOs have an exercise price of $10 per share. You exercise them when the price of your company stock is $12 per share. You have a $2 spread ($12 – $10) and thus $2 per share in ordinary income. Your company will withhold taxes—income tax, Social Security, and Medicare—when you exercise NQSOs.