This non-employee director option agreement grants the optionee (the non-employee director) a non-qualified stock option under the company's non-employee director stock option plan. The option allows optionee to purchase shares of the company's common stock up to the number of shares listed in the agreement.
Florida Non Employee Director Stock Option Agreement
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State:
Multi-State
Control #:
US-TC0913
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Word;
PDF;
Rich Text
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How to fill out Non Employee Director Stock Option Agreement?
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FAQ
Qualified stock options, also known as incentive stock options, can only be granted to employees. Non-qualified stock options can be granted to employees, directors, contractors and others. This gives you greater flexibility to recognize the contributions of non-employees.
A director of the company can either be a whole-time director or not. However, companies cannot issue ESOPs to an independent director (because it will affect his independence!) Any person falling under the definition of (a) or (b) belonging to a subsidiary or the holding company.
Tax treatment of NSOs Typically, NSOs are taxed at the date of exercise rather than the date of grant. The amount subject to ordinary income tax is the difference between the fair market value (FMV) at the time of exercise and the strike price.
Income tax upon exercise When you exercise NSOs and opt to purchase company shares, the difference between the market price of the shares and your NSO strike price is called the ?bargain element.? The bargain element is taxed as compensation, which means you'll need to pay ordinary income tax on that amount.
How are NSOs taxed when exercised? In short: You pay ordinary income tax rates on the difference between the strike price and the 409A valuation. Your employer already withholds a part, but it's the bare minimum (usually 25%)
With NSOs, you could trigger taxes both when you exercise and when you sell your options. This usually means you pay more taxes with NSOs than with ISOs. When you exercise an NSO, any spread between the FMV on the date you exercise and the price you are paying for the stock is considered ordinary income to you.
It's included in wages on Steve's Form W-2 and is subject to payroll taxes. In the case of a nonemployee, income from the exercise of NSOs would be reflected on Form 1099-MISC.
However, exercising an ISO is subject to Alternative Minimum Tax (AMT), which comes into play for wealthier tax payers or when the spread is large. NSOs are subject to the higher ordinary income tax rate on the spread as well as the payroll taxes (Medicare , FICA, etc.) for both the employee and employer.