M&T Securities, Inc. Brokerage Services can assist with employee stock option exercises for most publicly traded companies. We can carry out your instructions for the exercise of both Incentive Stock Options and Non-Qualified Stock Options.
- Cashless Stock Option Exercise - If you would like to exercise your options without using any out- of pocket funds, there are three choices:
A. Exercise and Sell the Stock - The option exercise and subsequent sale of stock are virtually simultaneous transactions. The net proceeds available are calculated by subtracting the exercise cost, the commission cost and any applicable taxes from the proceeds of the sale of stock.
B. Exercise and Sell to Cover - This cashless method allows you to sell only enough shares of the stock from the option exercise to cover the total exercise costs, commission and applicable taxes. The remaining shares are retained in your brokerage account.
C. Exercise and Hold the Stock - This method requires you to be approved for margin trading. Provided that the exercise meets our clearing firm's margin requirements, the margin loan would cover the total cost of the exercise and applicable taxes. The debit balance created by the margin loan would be subject to monthly margin interest. The shares would be retained in your brokerage account.
- Cash Exercise and Hold - In this scenario, you pay the total cost of the exercise plus applicable taxes. Shares are then retained in your brokerage account.
- Stock Swaps - This method allows you to use pre-owned shares of the stock you are exercising to pay for all or part of the purchase price plus any applicable taxes. Please note this method is subject to specified guidelines established by the issuer.
Tax Considerations with Employee Stock Options
Employee stock options can be complicated and the tax implications of exercising them can be significant. M&T Securities, Inc. does not provide tax advice on employee stock options. Please speak with your tax advisor prior entering an order for the exercise of incentive options.
Learn more about employee stock options. Call the M&T Securities, Inc. Brokerage Services desk at 1-800-724-7788, option 2, from 8:30am-5:00pm EST.