Introduction
When exercising stock options, you need to cover various costs including the exercise price and associated taxes. Cashless exercising allows you to cover these costs by selling some or all of your shares immediately after exercising, eliminating the need for upfront capital.
1. Exercise and sell to cover
You can sell just enough shares to cover the exercise costs and taxes, keeping the remaining shares. This is perfect if you want to:
Exercise your options without upfront payment
Retain ownership of most shares
Cover all costs through a partial sale of shares
Prerequisites
Before you can use cashless exercising:
Your company must have configured an exercise window with "Sell" or/and "Sell-to-Cover" options enabled
You must have exercisable stock options within the exercise window
Step-by-Step Process
Navigate to your exercise window in Ledgy.
Select the grant you want to exercise.
Choose your preferred method "Sell to Cover".
Review the estimated calculations:
Exercise cost
Estimated fees (trading fees and any currency conversion fees)
Estimated taxes
Expected proceeds (in shares)
Confirm the exercise request.
Your admin will reply to your exercise request inputting the right amount of taxes applicable to your request.
Approve the final request and review the data once more.
Sign any documents (if applicable).
Wait for the market order to be processed and settled.
2. Exercise and sell all shares
Navigate to your exercise window in Ledgy.
Select the grant you want to exercise.
Choose your preferred method "Sell all".
Review the estimated calculations:
Exercise cost
Estimated fees (trading fees and any currency conversion fees)
Estimated taxes
Expected proceeds
Confirm the exercise request.
Your admin will reply to your exercise request inputting the right amount of taxes applicable to your request.
Approve the final request and review the data once more.
Sign any documents (if applicable).
Wait for the market order to be processed and settled.
Important Notes
All amounts shown during the exercise process are estimates based on current market prices. Your final price will be set once the shares are sold. Final proceeds may vary due to market price fluctuations.
Market orders are processed during trading hours.
For "Sell to Cover", we calculate a buffer of 15% of your costs, effectively selling more than needed to cover price fluctuations, ensuring you won't have to pay extra costs afterward. Any remainder will be sent back to you via payroll or to your bank by your company.
Sell all means you will sell all your shares. Part of the proceeds will be sent to your company to pay for the strike price and taxes, the remainder will be sent to your selected bank account.
If your bank account currency differs from the stock currency, you will be charged with currency conversion fees.
Payment transfers can have fees associated with them, make sure to check in the bank information section whether you will be charged transfer fees.
Need Help?
If you encounter any issues during the cashless exercising process, contact your equity administrator or Ledgy support for assistance.
Remember to review all terms and conditions before proceeding with any exercise method, and consult your financial advisor if you're unsure which method best suits your situation.