Any precedent for extending the 3 month exercise requirement from date of separation?
September 11, 2002
Subject: A question for you.
Date: Wed, 7 Aug 2002
From: Art
Hi,
I own 20,000 ISO’s of a NASDAQ stock at a $4.86 strike price. I was laid off on June 6, 2002 and the company has a 3-month exercise requirement from date of separation, which means I have to sell on September 6. The stock was at $9 when I was laid off. I held, hoping it would go up. The stock is at about $4.80 now. A pretty common scenario, sadly.
Any precedent for extending the 3-month window into a longer time period? Any other advice? It looks like they will be underwater for a while. I spent 4 years at this company and was well regarded.
Thanks, Art
Answer
Date: Wed, 4 Sep 2002
Hello Art,
Just because you are granted options doesn’t mean you are guaranteed to benefit from them.
Employee stock options can’t qualify as incentive stock options three months after you leave employment with the company that granted them. The employer can extend the term of the options, but they will be converted to non-qualified stock options. Changing the terms of the options could create an accounting issue for your employer.
It would be nice if they offered you a severance package in appreciation for your contributions to the company.
Good luck!
Mike Gray