Understanding non-qualified stock options

Start a new job? Land a big promotion? Here are the basics of NSOs.

A conversation with Tim Lonergan, CFP®, CPWA®, Senior Financial Planner

5 July 2023

In today’s competitive landscape, companies constantly strive to attract and keep top talent. While salary packages and traditional benefits remain important, organizations understand the power of equity-based compensation, which can align employee interests with long-term company success. One of these compensation types is the non-qualified stock option (NSO). These options grant an employee the right to purchase company shares at a predetermined price.

In the video below, I discuss the basics of NSOs and their tax implications, and share my views on questions like:

  • What is the difference between my grant, vest, and exercise date(s)?
  • What are the tax implications of exercising a nonqualified stock option?
  • When will I be taxed on my nonqualified stock options?
  • How does a nonqualified stock option differ from an incentive stock option?
  • How can I pay for the shares I am exercising?

Watch the video below to learn more:

For additional questions on executive compensation, call us at 310-556-2502, email us at info@westmount.com, or reach out to your Westmount advisor directly.

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Disclosures

This document was prepared by Westmount Partners, LLC (“Westmount”). Westmount is registered as an investment advisor with the U.S. Securities and Exchange Commission. Westmount believes the sources used in this document are reliable, but Westmount does not guarantee their accuracy. The information contained herein reflects subjective judgments, assumptions, and Westmount’s opinion on the date made and may change without notice. Westmount undertakes no obligation to update the contents of this document. It is for information purposes only and should not be used or construed as investment, legal or tax advice, nor as an offer to sell or a solicitation of an offer to buy any security. No part of this document may be copied in any form, by any means, or redistributed, published, circulated, or commercially exploited in any manner without Westmount’s prior written consent.

If you have any comments or questions about this video, please contact us at info@westmount.com.