Non-Qualified Stock Options (“NQSOs”) are a common form of equity compensation, offering a share in the potential appreciation of a company’s value. Many of our clients have been (or will be) granted NQSOs as an employee of an issuing company or as an officer, directors, contractors, or consultants. Deciding whether and when to exercise NQSOs and sell shares can be difficult and requires cash flow analysis, complex tax planning, and a long-term strategy.
This checklist helps guide your conversations when advising clients regarding their NQSOs. It covers:
Issues to consider at grant
Implications of exercise, including early exercise and post-vesting
Tax considerations and the IRC 83(b) election
Share ownership and sale strategies
Concentration and other risks