What happens to my NQSO if my company’s stock splits?

November 13, 2000

Subject:   nqso and split
Date:   Sat, 21 Oct 2000
From:   David

I was given a nqso stock option for XXXX shares of a publicly traded corp. at $X0.00 per share. Vesting is over 5 years, i.e. can exercise 20% or XXX shares per year, or wait up to 8 years to exercise the option.

My question is:
If the stock splits tomorrow, does the number of shares in my option double to YYYY shares?

Say it splits to Y5.00 per share. Then say it goes up to $X0.00 or higher per share.

Does that mean I then have the option to sell YYYY shares at $X0.00 per share?


Date:   Mon, 13 Nov 2000

Hello David,

Yes, when a company’s stock splits, so do the employee options.

In your example, your pre-split option to purchase XXXX shares at $X0 will become an option to purchase YYYY post-split shares at $Y5.

When stock splits, the market price adjusts down for the increased number of shares. Companies usually split their stock to make the per share more affordable and attractive to more investors.

Good luck!

Mike Gray

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

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