Re: WOW!!! EXERCISABLE OPTION TO BUY-Giants
in response to
by
posted on
Feb 07, 2009 06:19PM
It is nither good timing or good insight. What it is was part of his employment contract in 2004.
As an example, I went to work for a retail company as a general manager. As part of my contract, I was to receive each year of employment, an option to buy 500 shares. The shares were exercisable 5 years from the grant date. So if I had an option for 500 shares awarded to me in 1995 for 22.50 per share, I could exercise the option in 2000.
Now if the share price in 2000 was 22.50 or less, there was no reason to exercise the option.
However, if the share price was $35.00, now I could exercise the option, and what I would usually do would be to sell enough of the option shares to cover the taxes due and to finance the purchase of whatever amount of shares the remaining money would cover.
The whole idea is to purchase the option shares with no out of pocket expense.
Unless of course you have lots of money, then you just might pay cash for the entire option and pay the taxes out of pocket.
I never was in a position to do it that way.
Jay