1) What is a stock option?
A stock option is a commitment from Company to allow you to purchase a certain amount of stock from the company at a fixed price for up to 10 years from the date of grant. The value of a stock option comes from its future appreciation. If the stock price increases, the amount of gain between the current stock price and the original option price will increase.
2) What choices are available to me as an option holder?
As an option holder you have a number of choices regarding what to do with your stock options. You must decide which choice is best for you based on your own circumstances. You can choose to:
- Hold your options to benefit from any potential appreciation in Company stock price over and above the option price, exercising your options at a later date,
- Buy Company shares at the option price and then hold the shares as a Company share-holder,
- Buy Company shares at the option price and sell some or all of those shares at the market price at exercise.
3) When can I purchase my stock?
Your option can be exercised and your stock can be purchased at any time during the life of the option, providing your exercise occurs after your options are vested and before they expire. Your original signed option agreement and, if applicable, your signed employment contract must be returned to your human resources representative prior to exercising your options.
Prior to selling your shares you must ensure that you are adhering to Company insider information and trading policies. If you are in possession of insider information and your options are expiring, you will be able to exercise your options via the cash payment method, but not the cashless exercise method (described below) since you will need to refrain from selling the shares until you are no longer in possession of insider information.
4) What alternatives are available if I choose to exercise my stock options?
If you choose to exercise your options, you can select from two alternative methods of exercising your stock options, or a combination of both:
- You can choose a broker-facilitated cashless exercise, which provides you with the net proceeds of the sale of stock without purchasing the stock in cash. Company has made arrangements with , a U.S. based brokerage company which offers worldwide stock brokerage services in major languages, to allow Company employees to perform cashless exercises of some or all of their options. Upon your instructions, will sell some or all of your shares then remit the cost of the option and any taxes due to Company, paying the resulting net proceeds to you. You might choose this method if you want to receive the appreciation in stock price over the option cost in cash.
- You can purchase stock in cash at the option price. If you choose this method, you will need to send a cashiers check to Company Corp. for the option price plus any required tax withholdings. Shares will then be issued by mail as a stock certificate or, if you prefer, direct to a brokerage account which you have set up in your name. You might choose this method if you want to hold onto the stock after exercise.