Employee Stock Options - CDN VersionNot sure if he is filing in Canada, regardless...
Options Issued
=no tax
Options Exercised
=employee pays cost of shares at discounted rate
=employee needs to report a taxable benefit (taxed as income) for difference between share value at time of exersise and discount price, in the year they exercise the options
=there is a 50% discount on the taxable benefit, up to $200,000 annually, should they hold the shares for 2 years, otherwise the difference between share value and exercise price is 100% taxable as income
=all future growth above the share value at exercise is a captial gain
So, the cost to exercising his options in CDN was the cost of the shares plus 50% of the difference taxed at his marginal bracket should he hold for 2 years.
Maybe he sells enough to cover only cost and taxes and then lets the rest ride? This would be positive.
Maybe he pays both purchase and taxes and lets all shares ride? This would be very positive.
If he is filing in Canada, then it's positive he moved early to mitigate the difference in exercise price and current share value anticipating a higher future share price.
My 2 cents...