Do
you have a client who exercised ISO's earlier this year? Was the
stock price considerably higher? If so, consider this scenario:
- You
have a client who works for Juniper Networks
- Your
client has an ISO grant for 1,000 shares.
- He
or She exercised in February when the price was around $100/sh
- You
want to demonstrate to your client the results if the shares were
sold in December as a disqualifying versus selling in February
of next year when the shares have matured.
StockOpter®
can help to quantify why your client should consider making a disqualifying
disposition before the end of the year. Here's how:
In
the base case, enter the number of ISO's exercised in the row titled,
"# of qualified options to exercise." Then, enter the
fair market value at the time the options were exercised in the
row titled, "Transaction stock price override." Sell the
shares the following year by entering the appropriate number in
the row titled, "# of shares to sell (qualified)." Then,
enter a projected stock price at the time the options are going
to be sold in the row titled, "Transaction stock price override."
Add
a case sheet using, "Blank values."
Enter
the same number of shares exercised at a FMV of $100/sh earlier
in the year in the row titled, "Disqualifying disposition."
Then, enter a projected stock price at the time the options are
going to be sold in the row titled, "Transaction stock price
override." (Consider using the same price as the first case
sheet to illustrate the results assuming no additional appreciation/depreciation
of the stock price from current levels)
Compare
the results on the Case Summary sheet. For the example above, if
the shares are sold as a disqualifying disposition at $25/sh in
December versus selling them qualified at $25/sh next February,
the results are as follows:
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