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Cashless Exercise |
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Cashless Exercise A transaction that is used when exercising employee stock options (ESO). Essentially, what you do here is borrow enough money from your broker to exercise the options. You then simultaneously sell enough shares to pay for the purchase, taxes, and broker commissions. Notes: What you are doing is technically called buying on margin. The brokerage lets you buy on margin in this case because they know there will be a quick repayment. The advantage of this technique is you don't need the cash on hand. |
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| Cashless Exercise -- Pay exercise price on options by simultaneously exercising options, selling a portion of the shares issued on exercise, and paying the exercise price with the proceeds. Reload feature in cashless exercise One of the major hurdles for executives in exercising nonqualified stock options is accumulating cash to pay both the exercise price and the withholding on the related compensation. Under a cashless exercise, an arrangement is made between the company and a broker to sell an amount of stock equal to the exercise price and to deliver shares to their employee net of that price. |
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Cashless Exercise
