Jump to content

Bonus to pay option exercise cost

Recommended Posts

For what it's worth, this is explicitly permitted for incentive stock options, which also need a FMV exercise price. See 1.422-5(c):

(c) Additional compensation. An option does not fail to be an incentive stock option merely because the optionee has the right to receive additional compensation, in cash or property, when the option is exercised, provided such additional compensation is includible in income under section 61 or section 83. The amount of such additional compensation may be determined in any manner, including by reference to the fair market value of the stock at the time of exercise or to the option price.

  • Like 1
Link to post
Share on other sites

sdcurt, the rule you need to be worried about is 1.409A-1(b)(5)(C), second sentence. Note that it explicitly excepts ISOs and ESPP options, so EBECatty's point is pertinent, but doesn't help if not an ISO. Uncertainty regarding whether a PowerPoint + course of dealing + emails and whatever else  = a "right" may give you wiggle room for the current transaction, but certainly whatever they are doing should be informed going forward (and, depending on facts and circumstances, maybe backward) by due consideration of the rule.

Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Create New...