Do I have employee stock options?

October 10, 2014

Date:   Fri, 10 Aug 2007
From:   Ashar

Sir:

I wish to say you have a website full of wealth on stock options. I have a small question.

I joined a private company and received this offer:

“On your first day of work, you will be granted non-qualified stock options to buy shares of company common stock priced at $ .75. This grant will vest as follows: one-fourth (25%) of the options on the first anniversary of your employment commencement date, and the remaining seventy five percent monthly over the next three years at the rate of 1/48 per month, such that the option shall become fully (100%) vested on the fourth anniversary of your employment commencement date. Grants are subject to the terms of the Company Stock Option Plan.”

I want to know what this means. I have no clue. Does this mean I have a stock option from the company or not? Is this beneficial to me or not?

Answer

Date:   12 Sep 2007

Hello Ashar,

Yes, it appears you have received a stock option from your company. “Vesting” means when you receive the shares, you have full ownership rights in them. Since the company stock is not publicly traded, I suggest that you should handle the options very carefully. Ask who in the company is responsible for administering the employee stock option plan, meet with that person and ask him or her to explain how the plan works to you.

Get a copy of our free report on “Executive Tax and Financial Planning For Non-Qualified Stock Options”.

Consider studying a book about employee stock options. We have a new one, Secrets of Tax Planning For Employee Stock Options, Stock Grants and ESOPs.

Best wishes,

Mike Gray

For more information about non-qualified stock options, request our free report, “Executive Tax and Financial Planning For Non-Qualified Stock Options”.

Comments are closed.