The exercise of a stock option (all or partial) is between the option holder (Optionee) and the Company but is NOT "options trading" in the more general sense. The exercise creates a taxable income event to the Optionee on the difference between the option strike price to be paid at the time of exercise by the Optionee and fair market price at the close of trading on the exercise day. The shares involved are issued by the Company from stock that has already been set aside for such incentive plans and reported in SEC filings. The Form 4 is the vehicle by which the Optionee notifies the world of the exercise and is the responsibilty of the Optionee not the Company. At least, that's how it worked for me when I was an Officer of the company. When I exercised options as Joe Employee I did not have to report anything and the company included the above-mentioned "gain" as ordinary income. When I subsequently sold the shares (some companies require a holding period of one or even two years for restricted stock) I reported it on IRS Schedule D.