Delete Alternative Choice in the Stock Plan

Aug 6th, 2022
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Stock options can also serve as an incentive for employees to stay with the company. The options are canceled if the employee leaves the company before they vest.
A: Yes. It is customary for a company to take back unvested options when an employee leaves the company for any reason. In fact, this is probably included in the stock option agreement you received when you were granted the options.
Any future appreciation will be taxed at long-term capital gains rates if you hold your stock for more than one year post exercise and two years post date-of-grant before selling. If you sell in less than one year then you will be taxed at ordinary income rates.
When a stock is delisted, options trading on that stock typically ceases. This means that options holders are no longer able to buy or sell their options on the open market. However, they still have the right to exercise their options if they choose to do so.
It will lose much of its value if you cant buy, sell, or exercise your option before its expiration date. An option contract ceases trading at its expiration and is either exercised or worthless.
If you believe in your companys future prospects, you may want to hold on to your options. If your companys share price rises, your options worth will continue to grow while putting off any tax consequences. This optionality or flexibility for a longer time frame gives your options even more value.
Accelerate your vesting, partially or in full The acquiring company could cancel grants that wouldnt have vested for a while, with or without compensation. The new company could also partially vest shares or continue the stock plan.
It may be couched in language such as company repurchase rights, redemption or forfeiture. But what it means is that the company can claw back your vested stock options before they become valuable.
Ideally, the cancellation would be documented both in a written notice sent to you and in a form that you would sign to acknowledge this action. Companies may also rescind or cancel outstanding stock options as part of an overall approach to the problems of underwater options or backdated options.
In the context of stock compensation, rescission is a rarely permitted and controversial practice allowing employees to rescind stock option exercises (or Section 83(b) elections with restricted stock grants) if the stock price drops substantially from the price at exercise (price at vesting for restricted stock).

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