Options Trading Tutorial

What happens to employee stock options when a company is bought out? My current company just announced that it is being purchased. What happens to my employee stock options? Do they convert to the new stock or do they immediately vest at the current price?

Are taxes withheld and reported on W2 for employee stock options? When exercising employee stock options, are taxes automatically withheld by the employer and reported on the w-2 so therefore no 1099-B needs to be filled out. It looks like I overreported withholding in 2005 according to the IRS and it appears because I doubled up the withholding for the stock exercise. Thanks

If a company reabsorbs a spin-off, what happens to employee stock options? I work for a spin-off of a larger company and received a number of options in the subsidiary when I was hired. Now it looks as though the parent company may reabsorb the subsidiary because they have lower visibility and want to regain industry traction. What happens to my options? Will they be converted to stock in the parent company? Paid out? What is the overall implication to the company if they have to reabsorb a subsidiary with 500+ employees? Thanks! I should probably state that I am vested with the company, which is US-based.

What are the tax implications of taking up employee stock options? I imagine if its treated as income then its liable to income tax? Is it as simple as this? Is there any way of issuing stock options without this tax implication?

What percentage of a company is generally permitted to be tied up in employee stock options? I heard investors don't like it when more than 10% of a company is granted as options to employees. Is this the case?

What is the tax rate that you pay on employee stock options that sell when a new company buys you out? Another compay is purchasing the compay I work for. All of the employees have stock. I heard we will be paid for them by the new buyer. What is the tax rate that I will have to pay and what can I do with the money to reduce my taxes?

What happens to my employee stock options if the company I work for is bought out? Would I be compensated for any outstanding shares at the buyout purchase price? What if the buyout purchase price is less than my current strike price? Thanks!

Are employee stock options taxed as capital gains or ordinary income when exercised? If the options were issued a few years ago, the stock goes up, and you exercise and then sell all in one transaction. Capital Gain or ordinary income? If Capital Gain, is it Long Term (award vs. exercise date) or short term (exercise and sell in one transaction)?

What is the best way to try to draw money out of my employee stock options? I'm not sure if I should try to get a lawyer or not, but my immediate supervisor says I can't touch it until I'm 59 1/2 yrs old...I am currently laid off and I don't plan on going back to work for the same company,I don't know if I have a legal leg to stand on or not...I figure it's my money, why do I have to leave it with "their" company if I'm not going to be working there anymore.

Employee stock options and end of employment? Hi, If I leave my company before the vesting period, I am aware that I loose my stock option. So does it mean that the money lets say if I am putting $1000 to buy the stock option, I loose that money too?

Taxes on employee stock options/profit sharing program? I learned that my company at one time had an employee stock option program which as a result of selling a majority stake to an Alaskan base company my employeer closed the program & converted it to a profit sharing one while they await IRS permission to depense the funds. Last I was told I was elegible for the program & that at the time the indivual share would be about $30,000 dollars. My question is I assume it will be taxed but can someone help me as to at what percent it would be? I guess to be more clear is it taxable & if as I assume it will be what type or percentage would it likely be taxed? I don't expect a perfect answer just an idea. A perfect answer would be of course nice but I won't hold it against anyone.

How Employee Stock Options are benificial and harmful? is it going to help only in long run , if i leave the company whether i'll be benefitted or not, can i return it back or sell it.

what is the tax rate on ESOP(Employee stock options) for an indian individual? what is the tax rate on ESOP(Employee stock options) for an indian individual,, ESOP is for a company listed in USA N ASDAQ but employee is in its indian subsidiary.

employee stock options vs stock warrants? What are the key differences between employee stock options (I'm not talking about the general stock options exchanged on derivative markets) and stock warrants issued by the company?

Employee Stock Options Expire while Freeze is in place? My company put a freeze in place for all employee stock option activities in July 2006 without advance notice. I have less than 30 day to exercise my stock options or they will expire. Does anyone know what my rights are if the options expire while the freeze is still in place? My company's officers - including HR, Finance, and Legal have all said they cannot provide an answer and cannot provide any direction. Help! Eric The company is Monster Worldwide (MNST). The options are valuable -10 years worth of accumulated value - somewhere in the $25K range. Monster did come under scrutiny for backdating options and hence froze the process. Have gone to Managers, CIO, HR contacts, and even company legal contacts and they will not provide an answer on what will happen. Does anyone know the best way to get a legal or SEC answer? Thanks!

what is the difference between employee stock options and regular exchange stock options?

How are Employee Stock Options taxed in US or any other country?

starbucks employee stock options? I hear if you work for Starbucks they give you stock options. Can someone explain?

Employee Stock Options (ISO)? What are your options / what happens to employee stock options with a company, if your company is acquired before your exercise date(s). Does your stock become worthless? Is it integrated into new company, with your pre-IPO stock price? Thanks for the help.

Cashing in Employee Stock Options? I worked for a company back in 2000 that had an IPO. Employees were awarded stock options, and I was awarded 2,000 shares. I still have the letter from the then president and CEO. I ended up leaving the company a few months later, so it appears as if I'm only 25% vested. The company, as it was, no longer exists. It was split into 2 separate companies. What value, if any, would the stock options have today, and could I cash out my vested portion?

When a public company is taken private, what happens to employee stock options, vested or not?

Do employee stock options count as votes in a shareholder vote? For example, say a shareholder vote is upcoming to approve a corporate merger. The merger requires a majority (>50%) of shareholders to approve the merger. Looking at the most recent 10-K, it appears that management and other insiders hold 52% of outstanding shares. #1 - Executives/management can vote their shares just like the rest of common shareholders correct? #2 - On closer inspection, the 52% owned by management is made up by a majority of employee stock options vs. stock actually held. Some of the options are fully vested, some are not. Do these options count as a vote as well? But these options count towards shares outstanding correct? So for the purposes of voting, is the shares outstanding reduced? Couldn't executives just choose to vest their options right before the vote? To further clarify: If shares outstanding is 17m, but 1m of those include are stock options held by top executives of the company, then really there are only 15m 'votable' shares. Is that correct?

When a company issues stock options to an employee, how does that work? How does the employee benefit, or not? How does the pricing work? Does it involve issuing new stock?

What happens to unvested stock options when a public company goes private? If a public company gets taken over by private equity investors, what is the typical handling of employee stock options ? The stock options are given as incentive, so it would be unfair to ignore them even if they are unvested. On the other hand, determining a fair value for them is difficult. Would love to hear from people who have gone through this process or have the legal expertise to comment on this situation.

what is the process between employee, employer, and stock broker in employee stock option exercise? Can someone explain to me how this works? When an employee exercises stock options, does the employee 1) normally pay the exercise price to the broker, who then sends the net proceeds back to the employee? Or 2) does the employee pay the company, and the company lets the broker know, and then the broker pays the employee the net proceeds? If I sound confused, believe me I am. Could someone be kind enough to give me a step by step of exactly what happens in the process, and what transactions are occurring between employee, broker, and company? THANKS!!

How to report sale of Employee Stock Purchase Plan shares on taxes (NOT options)? Last year I participated in my employer's stock purchase plan. This is NOT a stock option, just simply buying a set amount of stock via regular payroll deduction. I did sell some of this stock last year and I'm not sure what date to put as "date acquired" on my taxes since I acquired it...well, gradually. Any helpful info is appreciated.

help!!!..INCOME TAX..employee stock options program..how to? my mother had an employee stock option plan at her old job...she started buying stocks in 2005 and held them until 2009 when she sold $3000 worth of stock...she did her income tax return and forgot to report them so she did an amendement..she only earned around $17000 that year when the amendment was done..the tax preparer added the $3000 for the stocks my mom had sold and told my mom that on those $3000 she owed $2900 in taxes!! she is 54 yrs old, held the stocks for almost 5 yrs..all the tax preparer asked was how long she held them..ive been reading up on them and i read and also from calling IRS that she should have been asked if they were qualified or non qualified stocks...does anyone know anything about this?? it just seems like being taxed $2900 for $3000 is too much...why would anyone ever buy stocks then! should i just take her w2 form and stock form she got for income tax and have someone else do them.?????

I am ex-employee with vested stock options of Comp A. Is it right for company to freeze option account? I am ex-employee with vested stock options of company. First, is it right for the company to freeze my option account? And if the company freeze the trading under SEC rule, should I get extension beyond my option expiration date since I won't be able to trade within the 90 day after my termination of employment due to the trade freeze?

What happens to vested stock options if an employee is terminated with cause (fired)? Without cause? Worried about whether or not I'm going to lose my options if I am let go. Please help!

if an employee exercises his stock options, does that increase or decrease the share price? if an employee exercises his stock options, does that increase or decrease the share price?

Employee stock options--- I am really confused!! Need help...? So my company is offering me 5000 stock options to be at a $1 a piece. In the rules agreement, it says that the vesting period is 4 years and if I quit before then I do not get a payout. Does that mean my initial investment (if I choose to buy 5000 at $1 a piece now) will also be lost or do they just not pay out the appreciation?

Where can I find survey information regarding employee stock option plans for a technology start-up? Starting a technology company in Silicon Valley and want to put together a pro forma stock option plan for employees. Need a good source for % of equity for various job types (software engineers, UI designers, admin, etc. etc.)

Employee stock options?... my company is doing IPO soon...? My company is going public soon and they are offereing me 5000 options. What does that mean exactly? Do I have to pay for those or do I just get them for free and then whatever the stock price is, I make money on it--- ???

The company has withholding tax from stock options in divorce,how wud we pay the tax from the non employee ? The company has withholding tax (federal and state(CA) from stock options in divorced couple, the husband is the employee.How would the company remit the withholding tax from the wife's(non employee's) share in IRS and CA FTB?what forms need to file by the company?

What will be the tax position - an employee excersie and sell stock options after ceasing to be an employee? An employee at US excercising and selling NQSO after three months of resignation, would it still be a part of 'remuneration' or taxed under 'capital gains tax'

Help! Employee stock options - do I own them now? Hi there, I am new to shares and trading. Through my employer, I was eligible for stock options and the time has come to exercise (buy) the stock options. I'm leaving my employer soon (next week), and would like to check whether or not I currently own the shares. I have a few questions so please bear with me! 1. Can someone tell me what my portfolio means? 2. Based on the the information shown in my portfolio, does this mean I already own the stock options? 3. If I don't own the stock options, what action do I need to take to own the stock options? I'd like to do this before I leave my employer. ================================= My portfolio shows me the following: Action: Trade / Calculator Grant date: 01/01/10 Number: 123456 Type: Nonqual Status: Accepted Price: $4.50 Granted: 200 Exercisable: 200 Pending: 0 Estimated Market value: $xxxx ==============================

Is a capital loss on an Employee Stock Option tax deductible? If the options were given out as a "retention incentive" (an incentive for the employee to stay with the company), and they expire as a loss, is it deductible? (in Canada btw) thanks oh, I didn't mean a loss as a result from exercising the option, but rather the loss of the premium. thanks for pointing out the obvious though

Employee Stock options? I would like to preserve the percentage of ownership until the company has gone public. Can I be granted, let's say 1% of the company as options instead of a speific number of shares which would dilute my share if additional shares are issued. Also is it a %age of the shares issued or shares outstanding - what is the difference? Finally what grant is most tax effctive.

How do employee stock options work in this case? Hello, If there is a company that has a share price of $2, and another company that has a share price of $100, should I ask for more options at the $2 company? Does it matter? My reasoning is.. If the $2 stock goes to $3, the value of the company went up 50%. This is the equivalent of the $100 stock going to $150. Correct??And if I owned, say 10,000 shares, wouldn't I want to have options on the $100 stock and not the $2 stock? Thanks a lot for any thoughts.

employee stock options? What happens if the option give to an employee as comensation is not expired when he leaves the company? for example, if the option expires in 5 years but someone leaves in 3, what happens to the option? thanks for your help

how is stock in an employee stock option plan taxed? This is class A common stock owned by the employees of Amstead for purposes of retirement. I am 74 years old and have drawn one fifth of my stock for 2006.

Selling Employee Stock options is CONFUSING!! Please help!? I was granted 300 shares of company stock 5 years ago at $10. My company's stock is now at $25. If I sell everything I was granted today, how much tax should I expect to pay? Some notes: These are ISO shares (whatever that means). I will make around $50k this year in normal earnings (I never ever ever sell stocks or bonds or whatever else there is - I just have a job and I work like a normal person). I get confused when people start talking about non-qualifying whatever and disqualified shares and W2's and 1099's and Schedule D's and Publications of various numbers and whether these are long-term or short-term. I don't know any of this. I just know that I have 300 shares available at $10 and now our stock is at $25. All I want to know is how much tax should I expect to pay so that I can make sure to keep that money to the side when I make the sale. Can anyone help??? This seems like a straightforward question but no one seems to be able to tell me a straightforward answer.

Can anyone give me advantages to investing 401k into employee stock option plan? My companies holding co. is selling off . My co.now wants the employees to invest 401k and profit sharing monies into the ESOP program to purchase the company. Is this a good idea and can a good retirement be made from these kind of ventures? Any help on this topic would be appreciated.

Is the executive stock option same with employee stock option? Can you explain executive stock options? How to value executive stock options with blackout periods?

how to administer employee stock options for a first timer ? no software currently but manually administer in the past

what government agency monitors company employee stock option plans? I worked for Alion Science & Technology. they still refuse to give me my KSOP funds that I contributed to. (over 100 employees, in the same boat)

What is the accounting treatment for Employee Stock Option Scheme?

Employer Stock options, is only the profit taxed? If my employee option is for $30 and the stock trades at $31, is the taxable profit $1 ? I want to exercise as a cashless transaction with my employer so do I pay tax on the full $31?

Can a non-US citizen own stock options? Is it possible for a non-US citizen to own employee stock options of a US firm and make profit out of it? Can anyone tell me how does it work if it is possible? Thanks very much in advance. Edit: thanks so much for the quick reply! Could you please tell me a bit about the procedure? I feel completely lost now, lol.

My mom remembered she had an employee stock option in McDonald's from 1970-1973. How would she claim these? She has no idea how many stocks she owns but is sure that she was enrolled in the program. Any help would be huge as I know these stocks have split several times since that time.

Employee Stock Option Question...? Employee stock options are intended to serve as reward and motivation. What is the consequence if the option granted is out of the money? What should a company do about out-of-the-money stock options?

Do you know whether consultants are ever compensated in stock or options from a client company? Situation is a start-up company with venture capital but can't (won't) pay my quoted rate (I'm an independent consultant, business reengineering). They want me to come back with something much lower, maybe half. I'm OK with that IF I can negotiate something in return (and not just lower my price without due consideration). They've hinted at future upside (for them, as a company), so I'm wondering if there is a way for me as a non-employee to get stock options if I lower my consulting fee. I have no experience with non-cash compensation as a consultant. Anyone out there have some good information or ideas? Search27Man - Thank you for your forthright assessment, born of your experience. I'm interested in what others might say as well.

How do I offer stock options for the employees in my (small) consulting business? I have been amazed by the way venture capital firms attract 'more than neccessary' dedication of their employees by offering them stock options. I am interested to know what kind of terms and conditions generally form part of such an offer? I own a small HRD consulting business. How can I offer a similar incentive to my employees?

Can you hold incentive stock options in a 401(k) or Roth 401(k) My company has instituted an employee stock option plan and will grant incentive stock options to employees. If an employee is granted incentive stock options can those options be held in the employee's 401(k) or Roth 401(k) qualified retirment account?

Shares puchased throught employee stock option, for cost purpose what should be shown Market price then or pur? now for tax purpose, after I sold the shares during January 2008, for the calculation of cost, should I take the purchase price or the Market value prevailed then..I have been holding the shares for more than 2 years

What is stock options? why do companies give their employees stock options?

will a company's employee stock option affect dilution of embedded conversion option of convertible bonds? will an outstanding employee stock option plan affect in any way the dilution factor of the conversion option in a convertible bond? (assuming the convertible bond is not yet issued, and that an investor is contemplating whether or not to buy the proposed issue of convertibles)

What is the Tax implication for an employee in Employee Stock Option Scheme (ESOP) for the financial year 2006 If an employee is given some shares of the company where he is working, because of his exceptional performance what will be his liability as far as his income Tax is concerned.

Can an entity operating as an LLC offer an employee stock option plan?

what happens to an employee stock option plan when the employee resigns?

What's the difference between "restricted stock" and "stock options" from accounting perspective? A quick search on "stock options" shows that many companies are switching from "stock options" to "restricted stocks" as an employee compansation vechicle. Below is what I learned from my research. It could be wrong though. The sales of "stock options" are usually reported as loss. It reduces the company's tax liability, but also adversely affects the company's profit. From 2006, most companies are required to disclose the impact of the "stock options" sales to the public. My questions, When a company issues "restricted stocks" and the employee sells them, is the proceeding counted as "loss" like "stock options"? Why companies don't switch until recently? Does it have anything do to with the new SEC reporting requirement? Thanks,

How accounting of employee stock option is done in Indian companies? I want to know how Indian companies account their employee stock option plans.