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Non-Qualified Stock Options

The biggest difference between Non-Qualified Stock options (NSOs) and Incentive Stock Options (ISOs) is the tax incurred. NSOs are employee stock options that are taxed as regular income, which is significantly higher than the capital gains rate used when taxing ISOs. Obviously, the expectation is that a company’s stock price will increase, so NSOs could provide a significant financial return.

How it Works

NSOs afford an employee the privilege to purchase a set number of their company’s shares at a preset price within a designated timeframe. NSOs are usually offered to promote company loyalty, but they also reduce an employee’s level of potential cash compensation. The stock price often matches the market value and typically there’s a deadline attached to the options. If the expiration date passes and the employee hasn’t exercised the option on their NSOs, they will lose the stock options.

Want to Learn More?

There are many different options at your disposal with regards to NSOs. If you’ve been offered equity compensation in the form of NSOs (or any other type), please contact me and let’s look at your choices together.

For more information send me a quick email or call the office. | (203) 513-6331