For this purpose, modifications include reduction of the exercise price
, addition of other deferral elements and extension of the exercise period (with certain limited exceptions).
44, the amount by which the terminal stock price exceeds the exercise price
for the path reflecting four successive upward price movements.
If Tom made the election, recognized $43 ($50 minus $7) per share of compensation income on exercise and subsequently forfeited the restricted stock (with the company giving him back his exercise price
of $7), then his deductible loss on forfeiture would be zero, despite the $43 of income previously recognized.
For an option to qualify as an ISO, the exercise price
cannot be less than the fair market value of the stock at the time the option is granted.
Opinion 25 requires expense recognition only if an option's exercise price
is less than the underlying stock's market price on the grant date or other measurement date.
The Company backdated certain other stock option grants by selecting a grant date and corresponding exercise price
that preceded the date that the Company actually determined to make such grants.
A P employee who exercises an NQSO will have ordinary- compensation income equal to the stock's FMV on the exercise date, less the exercise price
, under Sec.
Such options are less attractive to employers because they are more likely to result in recognition of an employee compensation expense since the option's exercise price
may be less than the stock's market price at the measurement date (an in the money option).
The sixth grant had an exercise price
that was higher than the closing price on the appropriate measurement date.
It could either pay the exercise price
and all applicable taxes to the donor's employer and then receive the shares, or it could arrange for a same-day sale with a broker who would deliver the exercise price
and taxes to the donor's employer.
If a person or group becomes an Acquiring Person, each Right will then entitle all other stockholders to purchase, by payment of the exercise price
, FFIC common stock (or a common stock equivalent) with a value of twice the exercise price
422(c)(2) provides that the excess of the amount realized on the sale over the exercise price
will be the basis of determining the ordinary income to the ISO holder and the deduction to the corporation.