Swap Exercise

The IRS allows the avoidance of double taxation when selling or exchanging shares for the purpose of exercising NSOs. As such, ESO clients with NSOs can sell a portion of their shares to ESO and use those proceeds to exercise the balance of their options for their own benefit. If your shares are attractive, then ESO will supply enough cash to exercise all of your NSOs including the mandatory withholding taxes. No tax is associated with the sale to ESO, but regular NSO taxes are paid for the exercise using ESO money including the shares exercised and immediately sold. This swap exercise method is often much more tax efficient than exercising on your own, selling separately, and then using what’s left to exercise more NSOs on your own.

For more information on how the ESO Fund can help you with taxes on your NSO exercise, please contact us. (scott@esofund.com)

This innovative service promotes and enables a healthier relationship between companies and employees. I my opinion it's valuable to employees and great for the overall tech environment and economy. It is good for nobody when employees feel trapped because they can't afford to leave. In less extreme cases exercising can be expensive and somewhat risky and this is simply a good smart hedge and a good square deal. Brilliant!

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