Share Options - how do they work???

busterjones

Hi All -

I've been offered share options in work but have no idea how this works.

Do I have to physically pay the price of these to the company now to take them up or if I sign up is the 'purchase' price deducted later when the options are cashed in?

Cheers,

BJ

Gloomtastic!

They offer them to you at x price on a certain day. Only when you sell them will they deduct the x price (and tax) and the rest is yours.

There may be restrictions on how long you may have to hold them before selling and you may not be able trade at certain times of the year (near financial results). But in most instances they are yours to sell whenever - even if you leave the company.

pedronomix

This is not a simple matter. is it a private or quoted company? Most share option have different rules, terms and conditions. You could even be offered them now instead of a pay rise, the may have a vesting date at some date in the future and on and on ad infinitum. Unless you post the full details you will learn nothing here. Most companies who offer share options have someone in HR who will explain the detail of the scheme.

dbran

Be careful.

If you receive share options you become subject to self assessment and you have to return the income tax payable on the share option when you exercise it within 30 days on form rtso.

I understand that revenue caught up with a whole load of folks in a certain search engine company who failed to declare them properly.

Best of luck.

Dbran

busterjones

Thanks for the comments so far... Some more info from letter that I received today:

You have been granted options to purchase shares in xxxx. The type of share which you have been granted is called a 'short option' and must be exercised with 7 years. You have been granted the option to purchase shares in the company at 3.03 euro per share.

Then within another doc that I need sign it states:

I agree to pay to the Company the sum of 1 euro in consideration for the grant by the Board of Options over 5500 shares in the capital of the Company at an Option Price of 3.03 euro.

So - do I need to pay anything now or how or when do I do this?

Can I cash them now?

It's a private company so how do I know what the market value is at any point in time?

If the company's sold what happens?

Thanks!

pedronomix

busterjones wrote: »

Thanks for the comments so far... Some more info from letter that I received today:

You have been granted options to purchase shares in xxxx. The type of share which you have been granted is called a 'short option' and must be exercised with 7 years. You have been granted the option to purchase shares in the company at 3.03 euro per share.

Then within another doc that I need sign it states:

I agree to pay to the Company the sum of 1 euro in consideration for the grant by the Board of Options over 5500 shares in the capital of the Company at an Option Price of 3.03 euro.

So - do I need to pay anything now or how or when do I do this?



Can I cash them now?

It's a private company so how do I know what the market value is at any point in time?

If the company's sold what happens?

Thanks!

That is the offer, an option to buy 5500 shares at 3.03 within 7 years, you have to pay €1 for the option to be excercisable. Do do that! You still need to find out the rules of the scheme.
You can buy them now and sell them, but there is probably no market, so little point until you have a buyer at north of your purchase price. In a private company the only normal buyer is someone who wants to take it over. Exercise your option when a buyer has made an irrecocable offer for the shares. Bottom line, you are only in the hole for a single YOYO!!