Introduction
Managing the exercise of stock options is a critical responsibility for equity administrators. This comprehensive guide walks you through Ledgy's streamlined process for equity settlements, helping you transform vested options into shares efficiently and accurately. From initiating the transaction to generating legal documentation and notifying stakeholders, you'll learn how to handle the entire exercise workflow while maintaining proper documentation and transparency throughout the process.
Go to the Ownership > Transactions page, search for the stakeholder whose options need to be exercised. Click the three-dot icon on the right of the transaction and select Equity settle Options from the menu.
In the Equity settle Options window, input the relevant exercise information like Date, Grant units to settle, Settlement method, etc.
When you select Withhold to cover as the settlement method, an additional dropdown appears: Withheld shares behaviour. This controls what happens to the shares that are withheld to cover taxes or costs:
Return to treasury — Withheld shares are issued to the company as treasury stock. This is the default behaviour.
Return to pool — Withheld shares are returned to the original equity pool and become available for future grants.
Destroy — Withheld shares are permanently removed, reducing the total pool size.
💡 Tip: If a withheld shares behavior has been configured at the equity plan level, it will be auto-populated here when you select "Withhold to cover." You can override it per transaction if needed.
Under Documents & signatures, select the template to use to generate the exercise documentation. To generate the exercise document and draft signature request, enable the functions Create transaction documents from templates and Prepare signature requests for template documents.
Alternatively, you can choose to attach the exercise document directly on the transaction if it's already been signed outside of Ledgy. Simply toggle
After completing all required fields, click Create to generate your equity settlement transaction in Draft status. Review the details for accuracy, then click the Publish button in the top-right corner to finalise the transaction. Once published, the transaction will become visible to the stakeholder in their dashboard.
Note: Stakeholders with stakeholder dashboard access will only see their equity settlement once the transaction is published.
Frequently Asked Questions
Why is the Equity settle option greyed out?
Why is the Equity settle option greyed out?
If the grant was issued from a pool that is excluded from the cap table, the Equity settle option will be unavailable.
This is because grants from excluded pools cannot be exercised into shares without affecting dilution.
To check this setting, go to Equity Plans > Pools & Plans, open the relevant pool, and under Optional fields > Dilution settings, review whether Exclude pool from cap table is enabled.
For more detail on this setting, see How to exclude pools from the cap table?