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 individuals have been (or will be) granted NQSOs as an employee of an issuing company or as an officer, director, contractor, or consultant. 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 decisions regarding your 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
