Former public employer that we have options in just sold
The deal is expected to close sometime in Q4. The fluctuation though the day is just noise. The price will reflect a discount to the full takeover value, reflecting the risk of the deal falling through.  Cashless exercise is a good idea if you don't wish to own any QVC shares.
"Simply put, yes. I bought that call. I was betting the shares would rise in value by Jan 2018, and chose the $130 strike. With a strike nearly a year away, I paid a premium that was all time value as the shares traded at   Now the shares are replaced by $128. The time value has gone to zero, and there is no intrinsic ""in the money"" value. If the shares were bought at $140, the time value stills drops to zero, but the option is closed at $10 in the money.  My answer was for a cash deal. In a case where the old shares are replaced by new shares or a combination of shares and money, the options terms are changed to reflect the combination of new assets for old.  Update based on disclosure that it's Monsanto we are discussing.   Bayer and Monsanto have announced that they signed a definitive   agreement under which Bayer will acquire Monsanto for USD 128 per   share in an all-cash transaction. Based on Monsanto’s closing share   price on May 9, 2016, the day before Bayer’s first written proposal to   Monsanto, the offer represents a premium of 44 percent to that price.  You can see that the deal has been in the works for some time now. Further research shows they expect the deal to close by ""the end of 2017"". It's not a done deal. This is why the options are still trading.   Now the shares are replaced by $128. The time value has gone to zero, and there is no intrinsic ""in the money"" value. If the shares were bought at $140, the time value stills drops to zero, but the option is closed at $10 in the money.  My answer was for a cash deal. In a case where the old shares are replaced by new shares or a combination of shares and money, the options terms are changed to reflect the combination of new assets for old.  Update based on disclosure that it's Monsanto we are discussing.  Bayer and Monsanto have announced that they signed a definitive   agreement under which Bayer will acquire Monsanto for USD 128 per   share in an all-cash transaction. Based on Monsanto’s closing share   price on May 9, 2016, the day before Bayer’s first written proposal to   Monsanto, the offer represents a premium of 44 percent to that price. You can see that the deal has been in the works for some time now. Further research shows they expect the deal to close by ""the end of 2017"". It's not a done deal. This is why the options are still trading." I'm afraid you're not going to get any good news here. The US government infused billions of dollars in capital as part of the bankruptcy deal. The old shares have all been cancelled and the only value they might have to you are as losses to offset other gains. I would definitely contact a tax professional to look at your current and previous returns to create a plan that best takes advantage of an awful situation. It breaks my heart to even think about it. Is my understanding correct? It's actually higher than that - he exercised options for 94,564 shares at $204.16 and sold them for $252.17 for a gain of about $4.5 Million.  There's another transaction that's not in your screenshot where he sold the other 7,954 shares for another $2 Million. What do executive directors usually do with such profit?  It's part of his compensation - it's anyone's guess what he decided to do with it. Is it understood that such trade profits should be re-invested back to the company? No - that is purely compensation for his position (I'm assuming the stock options were compensation rather then him buying options in the open market).  There generally is no expectation that trading profits need to go back into the company.  If the company wanted the profits reinvested they wouldn't have distributed the compensation in the first place. I've never heard of an employer offering this kind of arrangement before, so my  answer assumes there is no special tax treatment that I'm not aware of. Utilizing the clause is probably equivalent to exercising some of your options, selling the shares back to your employer at FMV, and then exercising more options with the proceeds. In this case if you exercise 7500 shares and sell them back at FMV, your proceeds would be 7500 x $5 = $37,500, with which you could exercise the remaining 12,500 options. The tax implications would be (1) short-term capital gains of 7500 x ($5 - $3) = $15,000 and (2) AMT income of 12,500 x ($5 - $3) = $25,000, assuming you don't sell the shares within the calendar year. "Sycamore Partners ""saves"" brick and mortars from the ultimate death. By going private, these companies do not face the pressure of Wall Street and they can usually be saved and turn around a profit ( The Limited and Talbots are a few saved consumer shops)" Sad to hear. I hope the job market is okay enough in NJ to compensate the mass layoffs.    I wonder how much money each casino could save if they invested in rooftop windmill farms. Electricity is their biggest cost or second after employee payroll. Read this-   [Out of Control: The Coast-to-Coast Failures of Outsourcing Public Services to For-Profit Corporations](http://www.inthepublicinterest.org/sites/default/files/1213%20Out_of_Control.pdf)  Free trade agreements mandate a one way street to privatization of almost all public jobs and publicly procured services because it puts those jobs into play, they can then become bargaining chips in the globalization trading game. For example, US teaching jobs could be traded for national treatment in trade deals like TiSA- They could become valuable in the context of the fact that countries like India have a rapidly growing market and a surplus of people with degrees who speak perfect English. the US pharmaceutical industry might be able to trade access to those contracts for something like the curtailment of Indias policy on making cheap generic drugs. That kind of thing makes the US pharmaceutical industry see red. There has been a longstanding dispute with Australia over Australia's public health care systems' buying of drugs at a discount. The US claims thats prohibited by an FTA.  I think its the US's position is that that is unfair discrimination against corporations. Only private for-profit companies are allowed to negotiate discounts. You can probably find more here: http://www.bilaterals.org/?-US-Australia- or here http://www.italaw.com  (plug in the word Australia)  Privatization is often mostly about looting public resources for some goal that is very much against the public interest!   For example, look at the National City Lines fiasco- the reason the US went from having one of the very best to one of the worst public transit systems in the developed world - in only 30 years- is now addicted to oil and gas. I've had stock options at two different jobs.   If you are not getting a significant ownership stake, but rather just a portion of options as incentive to come work there, I would value them at $0.    If you get the same salary and benefits, but no stock options at another company and you like the other company better, I'd go to the other company. I say this because there are so many legal changes that seem to take value from you that you might as well not consider the options in your debate. That being said, the most important question I'd want to know is what incentive does the company have to going public or getting bought?    If the company is majority owned by investors, the stock options are likely to be worth something if you wait long enough.   You are essentially following someone else's bet.    If the company is owned by 2 or 3 individuals who want to make lots of money, they may or may not decide to sell or go public. Its important that you carefully read the agreement, if you accept the job. The options agreement will usually specify the vesting schedule, the strike price, and the number of options you will have.  When you start vesting options, you can choose to buy stock at the strike price. When you do exercise the options, your employer will likely withhold state and federal income tax. The strike price will hopefully be well below the market price.  Unlike stock, when your employment ends, you usually are not able to hold on to your options. There's typically a small window of time in which you can exercise your options. You should read this part of the agreement carefully and plan accordingly. The company may not permit a transfer of these options. If they do permit it, you simply give him the money and he has them issue the options in your name.  As a non-public company, they may have a condition where an exiting employee has to buy the shares or let them expire.  If non-employees are allowed to own shares, you give him the money to exercise the options and he takes possession of the stock and transfers it to you.  Either way, it seems you really need a lawyer to handle this. Whenever this kind of money is in motion, get a lawyer.  By the way, the options are his. You mean he must purchase the shares, correct? I just received a transfer offer -  Seems to me, they don't care what I do with the proceeds. Options 1 & 2 make that clear. "First, you mentioned your brother-in-law has ""$100,000 in stock options (fully vested)"". Do you mean his exercise cost would be $100,000, i.e. what he'd need to pay to buy the shares? If so, then what might be the estimated value of the shares acquired? Options having vested doesn't necessarily mean they possess value, merely that they may be exercised. Or did you mean the estimated intrinsic value of those options (estimated value less exercise cost) is $100,000? Speaking from my own experience, I'd like to address just the first part of your question: Have you treated this as you would a serious investment in any other company? That is, have you or your brother-in-law reviewed the company's financial statements for the last few years? Other than hearing from people with a vested interest (quite literally!) to pump up the stock with talk around the office, how do you know the company is: BTW, as an option holder only, your brother-in-law's rights to financial information may be limited. Will the company share these details anyway? Or, if he exercised at least one option to become a bona-fide shareholder, I believe he'd have rights to request the financial statements – but company bylaws vary, and different jurisdictions say different things about what can be restricted. Beyond the financial statements, here are some more things to consider: The worst-case risk you'd need to accept is zero liquidity and complete loss: If there's no eventual buy-out or IPO, the shares may (effectively) be worthless. Even if there is a private market, willing buyers may quickly dry up if company fortunes decline. Contrast this to public stock markets, where there's usually an opportunity to witness deterioration, exit at a loss, and preserve some capital. Of course, with great risk may come great reward. Do your own due diligence and convince yourself through a rigorous analysis — not hopes & dreams — that the investment might be worth the risk." "This is a great question.  I've participated in a deal like that as an employee, and I also know of friends and family who have been involved during a buyout.  In short:  The updated part of your question is correct: There is no single typical treatment.  What happens to unvested restricted stock units (RSUs), unvested employee stock options, etc. varies from case to case. Furthermore, what exactly will happen in your case ought to have been described in the grant documentation which you (hopefully) received when you were issued restricted stock in the first place. Anyway, here are the two cases I've seen happen before: Immediate vesting of all units.  Immediate vesting is often the case with RSUs or options that are granted to executives or key employees.  The grant documentation usually details the cases that will have immediate vesting.  One of the cases is usually a Change in/of Control (CIC or COC) provision, triggered in a buyout.  Other immediate vesting cases may be when the key employee is terminated without cause, or dies.  The terms vary, and are often negotiated by shrewd key employees. Conversion of the units to a new schedule.  If anything is more ""typical"" of regular employee-level grants, I think this one would be.  Generally, such RSU or option grants will be converted, at the deal price, to a new schedule with identical dates and vesting percentages, but a new number of units and dollar amount or strike price, usually so the end result would have been the same as before the deal. I'm also curious if anybody else has been through a buyout, or knows anybody who has been through a buyout, and how they were treated." Options or Shares vest by date they are granted. It would strike me as odd for anyone to say their shares were given with 4 year vesting, but the clock was pre-started years prior.  In my opinion, you have nothing to complain about. "You were probably not given stock, but stock options.  Those options have a strike price and you can do some more research on them if needed.  Lets assume that you were given 5K shares at a strike of 20, and they vest 20% per year.  Assume the same thing in your second year and you are going to leave in year three. You would have 2K shares from your year 1 grant, and 1K shares from your year 2 grant, so 2K total. If you leave no more shares would be vested. If you leave you have one of two options: To complicate matters subsequent grants may have different strike prices, so perhaps year two grant is at $22 per share.  However, in pre-public companies that is not likely the case. For a bit of history, I worked at a pre-ipo company and we were all going to get rich.  I was given generous grants, but decided to leave.  I really wanted to buy my options but simply didn't have the money.  Shortly after I left the company folded, so the money would have been thrown away anyway.  When a company is private the motivate their employees with tales of riches, but they are not required to disclose financial data.  This company did a very good job of convincing employees that all was fine, when it wasn't. Also I received options in a publicly traded company.  Myself and other employees received options that were ""underwater"" or worth far less than the strike price.  You could let them expire so one did not owe money, but they were worthless. Hopefully that answers your question."