The Alabama Stock Option Plan of Sunrise Assisted Living, Inc. is a comprehensive program designed to provide incentives to employees, consultants, and advisers through the grant of Incentive Stock Options (SOS) and Nonqualified Stock Options (Nests). SOS offer certain tax advantages to employees, as they are granted at a predetermined exercise price and can be taxed at the long-term capital gains rate when exercised and held for a specific period. These options are typically reserved for employees and are subject to specific eligibility criteria. On the other hand, Nests offer flexibility to grant options to a broader range of individuals, including consultants and advisers. Unlike SOS, these options do not qualify for special tax treatment and are subject to ordinary income tax rates upon exercise. The Alabama Stock Option Plan has a few notable variations in terms of granting stock options: 1. Employee Incentive Stock Options: These options are exclusively granted to employees of Sunrise Assisted Living, Inc. who meet specified criteria, such as minimum service requirements or employment status. These options come with certain tax benefits and are used as a retention and motivation tool to attract and retain talented employees. 2. Consultant and Adviser Nonqualified Stock Options: These options are granted to consultants and advisers who contribute their expertise and services to the company. These options serve as an incentive for driving the company's growth and success, offering flexibility in terms of eligibility and terms. 3. Performance-based Stock Options: This variant of the Alabama Stock Option Plan may be utilized to grant options based on specific performance milestones or achievements. It can be an effective tool for aligning the interests of individuals with the company's goals and incentivizing exceptional performance. 4. Vesting and Exercise Periods: The Alabama Stock Option Plan specifies the vesting period, which is the timeframe over which the granted options become fully exercisable. This period is often used to retain employees or incentivize long-term commitment. In addition, the plan outlines the exercise period, which determines the timeframe during which options can be exercised. Overall, the Alabama Stock Option Plan of Sunrise Assisted Living, Inc. offers a range of options to reward and incentivize employees, consultants, and advisers. It provides a platform for alignment of interests and fosters the company's growth and success by attracting and retaining key individuals who contribute to the organization's achievements.
Alabama Stock Option Plan of Sunrise Assisted Living, Inc., for grant of Incentive Stock Options and Nonqualified Stock Options to employees, consultants and advisers
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FAQ
An option grant is a right to acquire a set number of shares of stock of a company at a set price.
It can provide significant financial benefits If the stock value increases, you could make significant financial gains?but only if you've exercised (purchased) your options. And you can only do that if you've accepted your grant.
Incentive stock options, or ISOs, are a type of equity compensation granted only to employees, who can then purchase a set quantity of company shares at a certain price, while receiving favorable tax treatment. ISOs are often awarded as part of an employee's hiring or promotion package.
These grants come in the form of regular call options and give an employee the right to buy the company's stock at a specified price for a finite period of time. ESOs can have vesting schedules that limit the ability to exercise.
There are many requirements on using ISOs. First, the employee must not sell the stock until after two years from the date of receiving the options, and they must hold the stock for at least a year after exercising the option like other capital gains. Secondly, the stock option must last ten years.
Only employees can receive ISOs, whereas NSOs may be granted to any service providers (e.g., employees, directors, consultants, and advisors). ISOs must be exercised within three months following termination of employment (even if the holder continues providing services in some other capacity).
The contract will specify the grant date, which is the day your options begin to vest. When a stock option vests, it means that it is actually available for you to exercise or buy.
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.
Incentive stock options, or ISOs, can only be given to full-time or part-time employees. Other rules have to be followed in order to maintain ISO status, such as stockholders approving the option plan. An ISO has to be exercised within 90 days of employment termination.
The ISO $100K limit, also known as the ?ISO limit? or ?$100K rule,? exists to prevent employees from taking too much advantage of the tax benefits associated with ISOs. It states that employees can't receive more than $100,000 worth of exercisable ISOs in a given calendar year.