Exercising stock options merrill lynch
Warner, Susan (Hamilton, NJ)
Howard, Deborah (Jackson, NJ)
Berkley, Karen (Franklin Park, NJ)
Radcliffe, Eric (Kendall Park, NJ)
Um sistema experiente de conexão para negociação de opção de moeda internacional, Quah, T. S. et al. Nat. Univ. de Singapura, novembro de 1993.
Melhoraram o preço das pições usando redes neurais artificiais e bootstrap e mehtods, Labjcygier, P. R. et al. Revista internacional da Neyral Systems, vol. 8 número: 4 pp. 457-71, agosto de 1997.
Preço aproximado das opções, Chalasani, P. et al., 37º simpósio anual Foundations of Computer Science, pp. 244-253, janeiro de 1996.
The Electronic Invetor, A Big Edge para Little Guys, Três pacotes dão aos comerciantes de opções individuais algumas ferramentas que os profissionais utilizam, dezembro de 1995. *
Sistemas S & P ComStock / optionomics: olhando para o futuro com análise de risco de opções de som, Future, v22, n7, p28, 1993. *
Banco de Dados e a Internet - As empresas se reúnem para atuar no mercado, Martin Marshall, Communication Week, fevereiro de 1996. *
"Acordo de Serviços entre a PepsiCo, Inc. e Merrill Lynch, Pierce, Fenner & Smith Incorporated datado de 01 de julho de 1990" de 31 de outubro de 1990.
"Proposta para converter o Plano Sharepower da Pepsico para o Sistema Administrativo do Plano de Opções Gerais de Compra de ações da Merrill Lynch, vol. One, 7 de outubro de 1994" de 7 de outubro de 1994.
Este aplicativo é uma continuação em parte do aplicativo Ser. No. 08 / 487.902, arquivado em 7 de junho de 1995, agora Pat. U. S. N ° 5 671 363, e pedido de patente de invenção Ser. No. 938,939, arquivado em 1 de setembro de 1992, agora abandonado (as divulgações são aqui incorporadas por referência).
meios de armazenamento de dados endereçáveis para armazenar em relação a essas contas (i) opções que detêm informações, incluindo informações demográficas e relacionadas ao emprego em cada participante e informações sobre as opções outorgadas, adquiridas e exercidas por cada participante, e (ii) um sistema de regras axiomáticas pelo menos em parte definindo os referidos critérios de plano para o exercício das referidas opções;
meios de comunicação para a entrada de pedidos de transações de opção e confirmação de informações armazenadas;
meios de processamento para acessar os referidos meios de armazenamento, recebendo os referidos pedidos de transação e validando se e como processar as solicitações de exercício de opções;
meios de corretagem para acessar dados de preço de mercado na garantia subjacente à referida opção e implementar a referida transação de opção de acordo com a referida informação de participações de opção e o referido sistema de regras axiomáticas quando a referida solicitação de transação é validada; e.
compreendendo ainda pelo menos um sistema processador selecionado a partir do seguinte: para.
(a) converter e desembolsar moeda recebida de implementar a referida transação de opção em uma moeda diferente,
(b) operar a referida corretora significa em tempo real, e / ou.
(c) fornecer uma simulação acessória de participante e / ou corretor de uma ou mais transações de opções e os resultados esperados das transações antes da efetiva implementação da transação de opção solicitada.
acessando um dispositivo para armazenar em relação a essas contas (i) opções que detêm informações, incluindo informações demográficas e relacionadas ao emprego em cada participante e informações sobre as opções concedidas, adquiridas e exercidas por cada participante, e (ii) um sistema de regras axiomáticas em em parte, definindo os referidos critérios para o referido plano de acordo com as opções exercidas;
recebendo dos referidos pedidos de transação de opção participante;
processando os pedidos de transações e validando se e como processar as solicitações de exercicios de opções;
intermediando a referida solicitação de transação de opção de acordo com a referida informação de participações de opções, o referido sistema de regras axiomáticas e o pedido do participante quando o pedido é validado; e.
fornecendo pelo menos um sistema selecionado a partir do seguinte: para.
(a) converter e desembolsar moeda recebida de implementar a referida transação de opção em uma moeda diferente,
(b) intermediação da transação em tempo real, e / ou.
(c) simulando uma ou mais transações de opções e produzindo os resultados esperados das transações antes da implementação efetiva da transação de opção solicitada.
armazenando a identidade de cada cliente;
armazenando a identidade de cada participante para cada cliente;
criando uma ou mais contas, cada uma dessas contas associada a um participante;
armazenando informações em cada uma das referidas contas relativas a opções de ações detidas por esse participante de acordo com o plano de opção de compra de ações; A referida informação inclui:
o número de ações de ações restantes para cada uma dessas opções de ações que podem ser executadas;
o preço de exercício de cada uma dessas opções de ações; e.
um preço-alvo no qual cada uma das referidas opções de ações deve ser executada, o preço-alvo estabelecido por um sistema de regras axiomáticas;
monitorando os atuais preços de mercado para todas as referidas empresas;
comparando os preços atuais do mercado com os referidos preços alvo armazenados;
executando uma troca em cada uma dessas opções de estoque quando o preço de mercado igual ou exceda o referido preço-alvo; e.
em que os negócios são executados acumulando ordens de cada participante I dos referidos clientes J e exercitando as referidas ordens em blocos.
realizando pelo menos um passo selecionado do seguinte:
(a) converter e desembolsar moeda recebida de implementar a referida transação de opção em uma moeda diferente;
(b) intermediação da transação em tempo real; e / ou.
(c) simulando uma ou mais transações de opções e produzindo os resultados esperados das transações antes da implementação efetiva da transação de opção solicitada.
ANTECEDENTES DA INVENÇÃO.
A presente invenção geralmente se relaciona com sistemas de gerenciamento de contas controlados por computador para gerenciamento de opções de estoque e, mais particularmente, para um processador de dados para implementar um sistema de controle de gerenciamento para rastreamento e processamento de uma pluralidade de contas de opções de ações segmentadas correspondentes a participantes individuais de uma propriedade de ações patrocinada pela empresa plano.
Durante muitos anos, as empresas de propriedade pública forneceram pagamento a executivos de nível superior sob a forma de opções de compra de ações da empresa para quem estavam empregadas em descontos do preço de mercado vigente. Essas opções de ações são atraentes por vários motivos. Por um lado, a opção é uma forma de pagamento diferido que fornece certos benefícios fiscais e permite ao indivíduo controlar os horários durante os quais a renda é derivada. Além disso, a oportunidade de comprar ações na empresa é um incentivo adicional para que o destinatário da opção trabalhe para aumentar o valor da empresa, e também o valor das opções de compra de ações.
As primeiras formas de planos de opções eram de alcance limitado e disponíveis apenas para um punhado de executivos importantes. De fato, o uso de opções como forma de compensação foi rotineiramente limitado aos diretores de uma corporação, enquanto os demais funcionários receberam ações de acordo com planos de previdência ou, na maioria das vezes, não podiam participar da propriedade patrocinada pela empresa. À medida que as formas alternativas de compensação cresciam em popularidade, as empresas estavam cada vez mais interessadas em fornecer o pagamento a funcionários selecionados em formas não tradicionais. Conceitos como tempo flexível, compartilhamento de posição, adaptação de benefícios e outros tornaram-se a terminologia dos departamentos de pessoal para mecanismos para atender as necessidades de pessoal de uma maneira eficiente em termos de custos.
Mais recentemente, as empresas estão examinando o possível uso mais amplo da compensação baseada em opções de estoque para cobrir um maior número de funcionários, a fim de esticar dólares de pessoal e proporcionar remuneração aos funcionários de uma forma particularmente desejada por muitos membros da equipe. Embora tenha recebido entusiasmo substancial, os problemas na implementação de um plano de opções de ações patrocinado pela empresa são assustadores. À medida que o número de participantes cresce, o rastreamento de dados salientes torna-se cada vez mais complexo. Em sua maior parte, as empresas não estão equipadas para lidar com os atributos transacionais do processamento de opções de estoque em uma escala acima de um punhado de participantes. Cada uma das opções (ou cada bloco de opções) para cada concessão para cada participante no plano deve ser rastreada individualmente para a delimitação adequada de parâmetros como a concessão, aquisição, exercício e datas de vencimento e o preço de exercício específico para o qual o A opção direito foi concedida. Além disso, o exercício prático de uma opção requer o uso de uma casa de corretagem e uma troca estabelecida para negociação e consumação das opções e da garantia subjacente de acordo com os atributos do plano.
As complexidades do processamento de contas de opções aumentam desproporcionalmente quando mais de uma empresa está envolvida; Isto é especialmente verdadeiro para as empresas multinacionais que trabalham dentro das fronteiras de vários países - cada um com seu próprio conjunto de requisitos legais sobre propriedade de ações e conseqüências fiscais para os funcionários residentes. Até agora, houve uma ausência de recursos de processamento disponíveis para abordar a gestão de um plano de compensação de várias opções de ações de vários países e várias empresas para uma pluralidade de contas individuais. Além disso, os planos de opções de ações para empresas multinacionais ou para funcionários multinacionais (ou seja, funcionários que trabalham para uma ou mais empresas em dois ou mais países) têm o problema prático adicional de exercer opções em que a garantia subjacente e os fundos estão em diferentes moedas.
Além das diferenças de moeda, do ponto de vista do participante, pode haver incertezas significativas em como exercer opções porque as opções podem ser concedidas em planos qualificados (ou seja, elegíveis para tratamento fiscal preferencial) ou não qualificados e a opção pode ser exercida para que o participante recebe o título subjacente, um desembolso de caixa que representa essencialmente (menos impostos, comissões e honorários) a diferença entre o preço de exercício e o preço de mercado atual do título subjacente ou alguma combinação destes. Seria benéfico para o participante se pudesse simular vários resultados financeiros (por exemplo, incluindo impostos estimados, taxas ou desembolsos de caixa, ou combinações destes) para chegar ao que é melhor para as necessidades financeiras dos participantes que precipitam o exercício das opções.
OBJECTOS E SUMÁRIO DA INVENÇÃO.
É um objeto da presente invenção fornecer um sistema de processamento de dados para gerenciar uma pluralidade de contas individuais direcionadas para a realização e transação de opções para a compra de valores mobiliários de acordo com critérios de plano pré-estabelecidos.
É outro objectivo da presente invenção proporcionar um dispositivo de processamento de dados para gerir a implementação de um ou mais planos de opções de ações da empresa de forma contínua.
Outro objeto da presente invenção é fornecer um sistema para processar restrições do plano de forma a fornecer transações responsivas de acordo com o plano dita e selecione as entradas dos participantes do plano.
Um objeto adicional da presente invenção para fornecer uma transação sem dinheiro para o exercício de opções adquiridas de acordo com os termos do plano, através do uso de uma conta de corretagem vinculada para os participantes do plano.
Outros objetos adicionais desta invenção incluem o fornecimento de tais aparelhos e sistemas que podem funcionar entre as diferenças de moeda, fornecer a execução da opção em tempo real, permitir que o participante simule diferentes cenários de exercício para definir os parâmetros desejados para a execução das opções, ou uma combinação delas. .
Os objectivos acima e outros do presente invento são realizados num sistema de processamento de dados incluindo o controlo de uma programação armazenada dirigida ao controlo e rastreio de uma pluralidade de contas individuais, preços atuais de estoque, dados biográficos individuais, planos de opções da empresa e retenção de impostos e outros impostos requisitos. Para cada participante em um determinado plano, o sistema rastreia o número de opções para comprar ações que foram concedidas, a data de concessão, o número investido e a data do vencimento, eo número expirou e a data de vencimento. Nas datas determinadas do participante, o sistema implementa um participante que pediu o exercício de opções selecionadas de acordo com o plano de governo, por exemplo, preço da opção, porcentagem de retenção, etc.
De acordo com os atributos variados da presente invenção, o sistema usa uma conta de corretagem correspondente realizada no nome do participante para implementar os negócios reais de estoque necessários para o exercício da opção, com o preço de venda do mercado no intercâmbio utilizado para pagar o patrocinador do plano (empresa) o preço da opção, e o produto restante como compensação ao participante.
As características anteriores do presente invento podem ser melhor apreciadas a partir da descrição detalhada que se segue de uma forma de realização ilustrativa específica, apresentada em conjunto com os seguintes desenhos:
DESCRIÇÃO DAS FIGURAS.
FIG. 1 fornece um diagrama de bloco funcional das atividades operacionais abrangidas pela presente invenção;
FIG. 2 fornece um fluxograma lógico do módulo de atributo participante da presente invenção;
FIGS. 3A e 3B proporcionam fluxogramas lógicos do processamento de transações diárias implementado pela presente invenção;
FIG. 4 representa um fluxograma lógico do módulo de exercício de opção da presente invenção; e.
FIG. 5 fornece um fluxograma para a negociação cumulativa de ações de acordo com as instruções dos participantes em plano ou cliente.
FIG. 6 representa um fluxograma que mostra uma seqüência de etapas pelas quais o participante pode exercer opções em tempo real e outras ações tomadas pelo sistema atual.
DESCRIÇÃO DETALHADA DAS FORMAS DE REALIZAÇÃO ESPECÍFICAS.
Primeiro, brevemente, em visão geral, a presente invenção é direcionada para gerenciar as operações associadas à implementação em escala ampla de contas individuais de opções de ações para diferentes empresas e de acordo com planos distintos. A implementação é regida por um programa de controle integrado que implementa comandos em resposta à lógica do programa e às entradas ambientais atuais. O sistema mantém registros de memória de indivíduos participantes que possuem direitos atuais ou futuros para exercer opções de estoque selecionado, bem como uma pluralidade de planos de opções distintas que determinam a implementação dos direitos dos participantes do plano no exercício das opções concedidas aos participantes. O processamento é baseado no tempo e conduzido por eventos; por exemplo, as atualizações periódicas dos registros do participante ocorrem em intervalos regulares (preferencialmente pelo menos diariamente). Além disso, as entradas selecionadas preferencialmente desencadeiam o processamento do sistema, por exemplo, pedido de exercício de opções ou aquisição de preço-alvo.
Um sistema de processamento de dados sofisticado é usado para esta implementação, que preferencialmente inclui uma ou mais unidades de processador central baseadas em microprocessador (cpu) interligadas com vários controladores de E / S (entrada / saída), memória segmentada em forma de semicondutor e disco magnético (ie , memória imediata e armazenamento permanente), portas de comunicação para processamento distribuído e comunicação de entrada em tempo real para, por exemplo, cotações de ações recebidas (ou seja, cotação em tempo real do preço de segurança subjacente da opção). O programa de controle pode ser escrito em várias linguagens de programação comercialmente conhecidas (por exemplo, Cobol, "C", Pascal, etc.), desde que a versão executável resultante seja compilável de forma compatível com o hardware selecionado para o processador central e todas as estações de trabalho periféricas. Por exemplo, podem ser esperados excelentes resultados implementando esta invenção usando o Cobol II programado e executado em uma plataforma de sistema IBM 3090 (Sierra).
Com a visão geral acima mencionada, a atenção é direcionada para a FIG. 1 que fornece um diagrama de blocos da relação de processamento entre as várias instituições envolvidas no funcionamento da presente invenção. Mais particularmente, o proprietário do sistema opera o sistema em uma localização centralizada, bloco 10 onde o hardware de processamento central é mantido. Conforme mencionado acima, a invenção é direcionada para uma pluralidade de contas separadas envolvendo, no mínimo, arquivos segregados na conta de corretagem do participante e participante. Isso, naturalmente, exigirá o banco de dados 20 para a manutenção de arquivos de contas atualizados e passados.
Continuando com a FIG. 1, os blocos individuais estão interligados com linhas que indicam canais de comunicação. Por exemplo, cada participante 30 tem acesso a um registro de conta correspondente através do gerenciamento do sistema e pode usar este canal para entrar em ordens de exercicios de opção, enviar dinheiro para execução ou solicitar registros para fins fiscais. O proprietário do sistema está operando o sistema em benefício de uma ou mais empresas clientes separadas, o bloco 40, cada um com um conjunto diversificado de requisitos de processamento para seus respectivos grupos de funcionários. A este respeito, o sistema incorpora canais de comunicação para o cliente 40, os participantes 30 e o gerenciador de sistema 10.
As transações reais realizadas de acordo com os ditames da presente invenção são processadas praticamente através de um ou mais agentes de transferência 50, tipicamente um banco ou outro administrador criado para as transações envolvidas. O agente de transferência libera as ações de ações da nova empresa emitidas ou de tesouraria, que são passadas para o gerente do sistema (ou corretor associado) diretamente ou através de uma empresa de confiança depositária (DTC), bloco 55. Finalmente, o sistema está vinculado via por exemplo, sistemas de comunicação bem conhecidos para uma ou mais bolsas, bloco 60, para a execução das transações de ações de acordo com os ditames do plano, restrições do cliente, solicitações dos participantes e limitações da conta corretora.
Para entender os comandos lógicos que regem a implementação do presente sistema inventivo, uma breve descrição dos termos salientes pode ser útil e, portanto, fornecida na Tabela 1 abaixo:
1. Opção (ões). As opções são concedidas a um ou mais funcionários elegíveis a um preço de exercício definido na data gigante. As opções têm uma vida útil limitada e expiram no final do prazo se não forem exercidas. Uma opção é o direito de comprar um número definido de ações do título subjacente ao preço de exercício.
2. Período de Vesting. As opções concedidas a um empregado não são exercíveis até a conclusão de um período de aquisição, normalmente pelo menos um ano após a data da concessão. Os patrocinadores podem especificar seu próprio horário de aquisição. Conseqüentemente, cada participante pode ter opções adquiridas e não adquiridas em sua conta.
3. Exercício. Uma opção geralmente é exercida pagando o preço de compra até o número de ações concedidas na opção ao preço de exercício, de modo que a pessoa que exerce a opção possui o título subjacente. Os métodos de exercício de opções para planos de opções de ações para empregados normalmente incluem troca de ações, pagamentos de caixa de participantes tradicionais de recursos privados, bem como a venda efetivamente imediata do título subjacente após o exercício para pagar o preço de concessão (também conhecido como o método de exercício "sem dinheiro" porque o participante não precisa realmente comprar e vender o estoque, o participante efetivamente recebe o que teria sido o desembolso para tal transação). Para operações globais, o sistema deve implementar restrições específicas do país que podem inibir transações em dinheiro ou sem dinheiro por lei.
4. Renda. Após o exercício, os participantes realizam desembolsos de caixa, como o spread entre o preço da opção de concessão e o preço de exercício (valor justo de mercado na data de exercício), como resultado tributável. Os patrocinadores de planos tipicamente deduzem esse spread como uma despesa de compensação. O rendimento e a despesa realizados podem ser regidos de outra forma pelo IRS, SEC e / ou pelos regulamentos do plano específico. Os participantes também podem diferir renda ao exercer a opção e receber o estoque.
5. Impostos retidos na fonte. Os impostos sobre a renda do exercício de cada participante são retidos às taxas especificadas pelo patrocinador do plano. Os fundos para pagar os impostos retidos na fonte são arrecadados através da venda de uma série de ações obtidas através do exercício, participação na retenção na fonte, depósito em dinheiro ou troca de ações já detidas, com os fundos resultantes encaminhados para o patrocinador do plano para pagamento à tributação autoridades.
6. Serviços de corretagem. Cada participante é obrigado a abrir uma conta de corretagem para facilitar exercícios. O número líquido de ações obtidas através do exercício é depositado na conta. Os participantes podem manter as ações ou vendê-las à sua conveniência.
7. Custos de exercício. Cada exercício implica uma variedade de possíveis custos de exercício, contra os quais são vendidas algumas porcentagens das ações obtidas no exercício.
Estes custos podem incluir:
Preço da opção. Os participantes devem seu empregador, que emite o estoque que eles recebem no exercício, a opção preço vezes o número de opções que estão sendo exercidas. (por exemplo, 100 opções com um preço de subvenção de US $ 37,50 igual a um preço de opção de $ 3.750,00).
Impostos retidos na fonte. Conforme descrito acima, o spread em uma opção é tributável como renda ordinária. Alguns prêmios de opções e participantes internacionais, no entanto, podem não estar sujeitos a tributação sobre esse rendimento.
Comissões e taxas. O exercício da opção de compra de ações e venda de ações para cobrir os custos de exercícios implica taxas de transação. Os patrocinadores do plano podem optar por pagar essas comissões e taxas em nome de seus participantes no plano de opção de compra de ações, ou especificar que os participantes paguem por isso através de um depósito em dinheiro ou em ações ou através da venda de ações obtidas do exercício.
Agora virando para a FIG. 2, o módulo de configuração é apresentado no fluxograma delineando a entrada de dados de configuração para um arquivo de conta de cliente / participante novo ou atualizado e operações associadas. Mais particularmente, a lógica começa no bloco 100 e se ramifica para o módulo do gerenciador de banco de dados. Este sistema de gestor permite o acesso ao banco de dados de contas existentes, clientes e registros de participantes para fins de recuperação e atualização. À medida que a população de clientes / participantes cresce, o gerenciador de banco de dados será invocado automaticamente através do link para gerenciamento de sistema para processamento de atualização.
Para os propósitos da presente discussão, o gerenciador de banco de dados é usado para adicionar novos registros e arquivos para novos clientes e / ou participantes e atualizar arquivos existentes através do teste 120. Uma resposta positiva ao teste 120 (indicando uma nova entrada de cliente, ou seja, nova empresa interessada em starling um plano para seus funcionários participantes que permitem a concessão e transação de opções de estoque em uma base gerenciada em curso) ramo lógica ao bloco 130 em que um local de arquivo endereçável designado é alocado no banco de dados para parâmetros de perfil de cliente; esses parâmetros, conforme verificado pelo gerente do sistema, são então inseridos no bloco 140.
O sistema exemplificado aqui descrito inclui vários planos pré-empacotados para delinear os direitos e obrigações do cliente para os participantes sobre o processamento de opções. Esses planos estarão disponíveis para o novo cliente conforme estabelecido no teste 150, onde uma resposta negativa invoca o processo de seleção dos critérios do cliente recebido. Com base nisso, o Plano selecionado é inserido no banco de dados para governar transações futuras para o novo cliente. Alternativamente, o cliente pode personalizar um Plano de opção de compra de ações de acordo com as necessidades e interesses específicos do cliente. Isso é feito através de uma resposta positiva ao teste 150 e à entrada de parâmetros personalizados do Plano no bloco 170. O processamento continua para o próximo teste do cliente (novo) 180 ou para continuar o bloco 190.
Continuando com a FIG. 2, assumindo uma resposta negativa ao teste 120, ramos de lógica para testar 200 que identifica se o participante é novo ou existente dentro do banco de dados para esse cliente. Uma resposta positiva ao teste 200 (novo participante) continua a bloquear 210 para abrir / inserir um novo registro correspondente a esse participante. O participante é, em seguida, logicamente concatenado para o cliente apropriado, o bloco 220, herdando assim todos os recursos planejados do plano de opções do cliente previamente inseridos para esse cliente. Posteriormente, o sistema procura os demais parâmetros de definição para esse participante para armazenamento dentro do registro de banco de dados endereçável, bloco 230. Isso continua para a próxima entrada de participante em que, teste 280.
Se o participante já estiver no sistema ("não" para testar 200), a lógica se ramifica para testar 240 para determinar se uma alteração de status foi feita no arquivo do participante. Uma mudança de status é direcionada para os parâmetros armazenados para esse participante e pode incluir informações biográficas, demográficas ou de pagamento, como promoção, aquisição de opções selecionadas, término, expiração de opções, opções de exercícios ou outras alterações. Se uma resposta positiva for recebida, os registros salientes são acessados, bloco 250, e as mudanças apropriadas entraram nos registros, bloco 260.
Na estrutura lógica anterior, o cliente e o participante são definidos pelo sistema através de um plano de opção especificado e, de fato, este Plano pode ser modulado e incrementado de acordo com o cliente, de modo que uma pluralidade de Planos diferentes sejam implementados pelo sistema (por exemplo, Plano (I), em que I é uma variável de indexação para os diferentes clientes que utilizam o sistema de gerenciamento de opções). Neste contexto, o Plano pode incorporar o perfil das informações mostradas na Tabela II no processamento de contas de opções para os vários participantes. Cada plano gerido pelo sistema inclui de preferência (i) um conjunto de parâmetros para fins tais como identificar e / ou categorizar os detalhes necessários para cada participante e suas opções, (ii) um banco de dados contendo cada um desses parâmetros e ( iii) um sistema axiomático, definindo, pelo menos em parte, os critérios do plano para o exercício das opções por um participante do plano. TABELA II Descrição Resp. Tamanho REGRAS DE NÍVEL DE PLANO Nome do plano Mrking 50 Chars Plano código fonte Oper 9 Chars Plano estoque cusip Oper 8 Chars Plano estoque desciiptioil Oper 20 Chars VRS Mrking Sim ou Não Número de telefone VRS Oper 999-999-9999 Declarações anuais ou trimestrais Mrking Annl ou Qtrly Cliente nome curto da letra 1 Sistemas 20 Chars Nome do cliente nome curto 2 Sistemas 20 Chars Número de telefone da carta do cliente Sistemas 999-999-9999 Atribuição da conta Operar Sim ou Não Plano data ativa Sistemas CC / YY / MM / DD Compensação de incentivos Mrking Sim ou Não Subsídios fracionários Mrking Sim ou Não Permitir certas concessões Mrking Sim ou Não Dados de folha de pagamento necessários para o exercício Mrking Sim ou Não Exercícios máximos até o presente exercício Mrking 999 Montante mínimo de exercício Mrking 9,999,999.9999 Valor máximo de exercício Mrking 9,999,999.9999 Duração do exercício do preço-alvo (d) Mrking 999 Data de início do apagão do exercício Mrking CC / YY / MM / DD Exercício data de término do cancelamento Mrking CC / YY / MM / DD Preço limite% Mrking 9.9999 1ª inflação de venda% Mrking 9.9999 1ª comissão mínima de venda Mrking 999.99 1ª comissão de venda% Mrking 9.9999 2ª venda inflação% Mrking 9.9999 2ª venda comissão mínima Mrking 999.99 2ª comissão de venda% Mrking 9.9999 Repita seguindo para cada tipo de exercício válido para o plano (max. 30 tipos) Tipo de exercício Mrking 6 Chars Código de exercício Sistemas 1 Char Descrição do exercício Mrking 30 Chars REGRAS DE PAÍS País número Oper 999 País Nome Mktg 30 Chars Permitir exercícios VRS? Mktg Sim ou Não É necessário um novo formulário de conta? Mktg / Legal Sim ou Não Forçar compartilhamento de entrega Oper / Legal Sim ou Não Autoridade especial de usuário necessária Oper Sim ou Não Operação especial do usuário 8 Chars Repetir a seguir para cada exercício válido permitido (máximo de 30 tipos) Tipo de exercício válido Mrking 6 Chars Código de exercício válido Sistemas 1 Char Descrição válida do exercício Mrking 30 Chars REGRAS DE CONCESSÃO Data de concessão Mrking CC / YY / MM / DD Preço da subvenção Mrking 99,999.99999 Data de vencimento da doação Mrking CC / YY / MM / DD Exercícios máximos até o presente exercício Mrking 999 Valor mínimo de aquisição de direitos Mrking 9,999,999,9999 Investido em dívida cusip Oper 8 Chars Conta pendente adquirida Oper 9 Chars Vested cpsip caiu Oper 8 Chars Vested caduca compacta Oper 9 Chars Cusip pendente invicto Oper 8 Chars Conta pendente não vencida Oper 9 Chars Cusip caiu desviado Oper 8 Chars Conta caduca não vencida Oper 9 Chars Exercício cusip Oper 8 Chars Conta de exercício Oper 9 Chars REGRAS DE ESTADO DE EMPREGADO Código de estado Mrking 1 Char Status descrição Mrking 30 Chars Quantidade de corte de exercício Mrking 9999 Exerci Tipo de cálculo Vesting Mrking Truncate ou Round Verificação especial de contagem Sistemas Sim ou Não 100% data de aquisição Sistemas CC (YY / MM / DD) Código de status Mrking 1 Char Vesting rate / YY / MM / DD Repetir a seguir para cada data do evento (até 25 datas de eventos) Data de aquisição do evento Mrking CC / YY / MM / DD Data de aquisição do evento Mrking 9.9999.
No perfil acima do Plano, a coluna "Resp". indica a divisão de especificação do proprietário do sistema responsável pelos dados variáveis, por exemplo, "marketing". O VRS representa um Sistema de Resposta de Voz que permite o acesso direto do telefone às opções do sistema para o participante através da entrada de tom de toque, de preferência em vários idiomas. A coluna "Tamanho" indica uma concretização do tamanho e / ou formato do formato de registro para gerenciamento de banco de dados.
Regras de nível de plano adicionais (ou outras regras) podem ser implementadas conforme exigido por um sistema específico ou o qual o administrador requer ou deseja. Por exemplo, outros riles de nível de plano preferidos incluem o tipo de concessão de opção, um sufixo de concessão de opção, se o plano para o participante é permitido pelo comércio em tempo real (descrito abaixo) e o tipo de moeda particular (por exemplo, transações em moeda estrangeira, conforme descrito abaixo), o idioma em que a VRS responde como padrão quando os telefones do participante, as letras de término e as letras de expiração da opção. O sufixo de concessão de opção é útil quando, como aqui preferido, o sistema reconhece as opções por data de concessão porque diferentes tipos de opções ou opções com condições diferentes de exercício podem ser concedidas ao participante na mesma data; portanto, o sufixo pode permitir ao sistema distinguir entre diferentes tipos de opções concedidas ao mesmo participante na mesma data. Os parâmetros para letras de rescisão e letras de expiração de opções são equivalentes a alternadores, solicitando se o sistema deve emitir cartas ao participante como notificação, respectivamente, que a participação no plano foi encerrada (e, por exemplo, como as opções podem ser exercidas no futuro) e a (s) opção (s) específica (s) concedida (s) são devidas e / ou expiraram. Da mesma forma, as regras de concessão podem incluir parâmetros para o tipo de concessão de opção eo sufixo de concessão de opção.
Com a estrutura do Plano acima para ilustração, a atenção agora é direcionada para a FIG. 3 representando o caminho lógico para o sistema inventivo associado ao processamento periódico (diário) da conta. Começando no bloco 400, a lógica carrega o módulo do sistema no bloco 410. O módulo do sistema governa o processamento de contas na base de dados periódicos ou de entrada. Neste contexto, o processamento de entrada é exemplificado por um pedido de transação recebido por telefone de um participante. O processamento periódico é baseado no tempo (por exemplo, diariamente) e funções para controlar o processamento de contas baseado em tempo - por exemplo, a remoção de opções adquiridas após o vencimento de um período de terminação delineado pelo Plano para a opção. Outro processamento baseado em tempo incluirá a comparação do preço atual das ações em uma troca com um preço-alvo especificado no arquivo de um participante com uma transação contingente executada automaticamente se a comparação preço-cotação for satisfeita. In this context, the current stock price corresponds to some recently completed and fixed transaction, such as "end of day" pricing. Other market pricing techniques may be employed.
Continuing in FIG. 3, at blocks 420 and 430 the system accesses the participant files in sequence for processing in accordance with the Plan dictates for the entered Date. Test 440 determines whether the participant/plan files delineate a grant date for the option account. If so ("yes"), logic proceeds to blocks 450-490 wherein the Plan is accessed and used to quantify and confirm the option grant, calculate vest and optionally option price for the newly granted options and update the participant files in accordance therewith.
At test 500, the system determines if the date of processing is a vesting date for that Ith participant; if so, logic proceeds to blocks 510-540 for processing the participant records in accordance with the Plan and specifically updating the options (vested) available for transacting by the participant. The records for the Ith participant are updated with the new information replacing the existing files in the database.
Plan constraints often include time periods for exercising vested options. Therefore, after the passage of time, unexercised vested options will expire. The system module determines this at test 550 for each participant (unless the Plan for that participant has no time based option expiration function). A positive response to test 550 branches to blocks 560-590 wherein the Plan is accessed and the associated expired options removed from the participant's account.
As discussed above, exercise of options by the participant may be accomplished by both direct request or by a time function; this latter course involves the setting of a target price for the shares that is above the current market price, and the setting of transaction time period in terms of start time (or date) and span (duration of requested price delineated transactions). Once evoked, the system must continuously (implemented in incremental updates) receive market data for direct comparison to the target price, and automatically execute the requested transaction upon satisfaction of the target-market price comparison.
The foregoing is accomplished as follows. At test 600, the system determines if a target price exercise older has been entered for the user and if so the target price, TP(I) and the duration DD(I) for the Ith participant, block 610. The system then accesses the current quote for the specified security, defined as MAR_P(D), at block 620 and compares this price data at test 630. If the comparison criteria is met, logic proceeds to block 640 where the system links to an exchange for automatic execution of the options exercised. The participant's account is then updated at block 650. If test 630 is not satisfied, no transaction is authorized for this period and the participant's file is updated accordingly at block 660. The system then increments to the next participant (I+1) for further processing at block 670.
In addition to the entry of time-driven exercise orders, the system preferably can processes exercise orders on an order receipt basis, i. e., older-driven processing as opposed to event-driven processing. In this mode of operation, for example, the system provides two forms of execution to the participant with vested options, funded and cashless. The funded transaction is the traditional mechanism described above for processing options and involves the receipt from the option holder of the share price defined in the option account which is then coupled with additional funds from the option grantor for purchasing the security on the exchange at the strike price of the option. The security is then provided to the plan participant for disposition.
An alternate approach, the cashless approach, does not require any contribution by the participant and is based on the normally common occurrence of an option price that is significantly below the current market price of the security. A cashless transaction involves the disposal of shares at the market price (either treasury shares or previously purchased shares) with the proceeds divided between the client (option grantor, receiving the option price for the sold shares) and the participant (who receives the market price minus option price (i. e., MAR_P-OPT_P) multiplied by the number of shares). This transaction is considered "cashless" because no initial contribution is required by the plan participant option holder.
A third form of option exercise involves the use of stock as directly contributed by the participant to fund the exercise of the options. This stock can be sold at open market with the proceeds used to fund the execution of the option. However, more usually, the participant "swaps" an amount of stock sufficient to exercise the options, and receives the shares represented by the options minus the shares she used for the exercise. For example, if the participant has 1000 options (i. e., to purchase 1000 shares) for which the funds required for exercise are equal to the present market value of 100 shares of the same stock presently owned by the participant, the participant will receive 900 shares in a "stock swap" exercise of the options.
The foregoing transactions are accomplished by the present system in accordance with FIG. 4. Beginning with start block 700, logic proceeds to block 710 and input of the current queued request for the Ith participant. At test 720, the system first confirms that the participant order is proper, i. e., the current records reflect possession of vested options to support the exercise request for that participant; other confirmation data may be accessed for foreign security laws on ownership, etc. as may be needed.
Assuming a negative response to test 720, logic continues to test 740 wherein the system determines the form of the transaction, i. e., cashless or funded. If the 45 funded request is selected by the participant, logic branches to test 750 to confirm receipt of the necessary funds to support the purchase. As stated earlier, all transactions are based on the use of a concurrent brokerage account and the requisite funds may be established by one of several mechanisms such as margin on existing shares etc. If the transaction as requested is unfunded, ("no" to test 750) the system stops execution of the older and prepares a report, block 760.
If the transaction is fully funded, the system enters the participant selected target price for the transaction, TP(I) and recalls the current market price, MAR_P(D) at blocks 780 and 790 respectively. Test 800 compares the prices for the security with automatic execution of the transaction instituted upon satisfaction of the test via blocks 810-830. The target price may be and often is set at the current market price by the participant to insure execution of the option (i. e., test 800 always satisfied).
Continuing with FIG. 4 and assuming selection of the cashless exercise, processing proceeds to block 840 for the entry of the target price by the participant. Again the system accesses the current market price for that security and compares this value to the selected target price and additionally the stored option price for that participant. This latter test condition is required as the TP(I) must also support the payment of the option price and the accrued transaction fees pursuant to the designated cashless transaction. Satisfaction of this bifurcated conditional permits automated order execution via the brokerage account for that participant, blocks 870 and 880. Logic then proceeds to the next order in the queue.
Although the entry of option exercise instructions are made on an individual participant basis, the actual implementation of these transactions is done on a client/security basis, i. e., transactions for a given security are accumulated so that the actual trade order that reaches the exchange comprises many individual orders combined. The method of accumulation is not critical and may proceed by either a set time period or by volume of transactions in given securities.
This accumulation process is delineated in FIG. 5. At select intervals, the system begins the transaction procedure via start block 1000, confirming the transaction period at test 1010. A "yes" to test 1010 starts the transaction entry process; each plan is accessed and each participant incremented by indexing variables "J" and "I" respectively, blocks 1020-1040. At block 1050, the system accesses the transaction request REQ(I) for the Ith participant. If this REQ is confirmed at test 1060 (meets plan constraints and target price considerations), the system accumulates the optioned shares into the total for that security, block 1070, wherein TSO(J) represents the total stock options for the Jth security and ISO represents the individual stock options REQ by the Ith participant. Logic continues for each Ith participant and Jth Plan with the retention of TSO(J) for all J's in the system, blocks 1080-1100. These collected and confirmed orders are then sent to the exchange for execution, block 1110.
Continuing with FIG. 5, test 1120 confirms that the order as entered on the exchange was executed per instructions. A positive response to test 1120 is followed by system file update with the new information, block 1130. If the order cannot be confirmed, the system determines whether the a price limit failure occurred, test 1160. A price limit prevents a rapidly shifting market from causing a negative cash transaction by assuring that the market price received for the security is sufficient to cover the option price plus whatever incidentals may accrue. If a price limit triggered an aborted trade, a report is generated, block 1180; if the trade failed for some other reason (e. g., trading stopped for that security on the exchange) the system contacts the broker to complete the report, block 1170. This ends the processing until the next period or volume limit is reached, block 1150.
With the proliferation of multinational corporations and employees who may likely be working in various countries during their tenure with one or more international companies, the invention also allows for the management of stock option plans where the money used for the exercise transaction, and/or for the disbursement of proceeds (e. g., "cashless" execution of the option), are in different currencies. In such a system, the participant requests (i) the form of option exercise desired (e. g., cashless, regular sale, or cash balance disbursement), (ii) that the proceeds are to be distributed in a particular currency eligible for the plan, and (iii) the desired method of disbursement (e. g., cash or wire transfer). The exercise of the option proceeds as described above with the additional input that the broker (or participant, as described below) enters to indicate that a "foreign" currency transaction is requested, and how the funds are to be disbursed. Preferably, wire transfer instructions and information must be provided by the plan participant prior to execution of this foreign currency transaction; otherwise, measures can be implemented to allow the participant to submit wire transfer authorization and for the broker (or customer service representative) to enter and confirm that information during the participant's online modem or telephone session. The option exercise then proceeds as described above with a disbursement monetary value generated that is due to the participant as well as the type of currency with which the option was exercised and the type of currency that the participant desires to be disbursed. If the two currency types are different, the system queries a database (present in the system or remote accessible online via a service provider) for the exchange rate between the two currencies, and generates a value of the disbursement in the currency type requested by the customer. Preferably, the system also generates a transaction fee for the currency exchange based on a standard rate or such other terms as the plan manager may require or may have agreed with the company whose options are being managed. The system also preferably generates output reports for the manager and/or the participant and/or the company regarding wire transfers and/or currency rate reports (including any applicable exchange transaction fee(s)).
In another embodiment of this invention, it is preferably contemplated that a participant engages the system and exercises vested options without directly contacting a broker. As such, the participant can access the system on a bulletin board directly via modem, a hypertext page (preferably via secure server protocol) on the web portion of the internet, or a menu system via touch-tone telephone as mentioned above. The participant would be required to enter account information and one or more passwords (e. g., a PIN, a personal identification number). Thereafter, the participant enters, for example, information indicative of the particular options to be exercised and, optionally, trading, currency, and/or proceed distribution instructions. For example, the participant can direct the system to exercise specified options only if the price of the underlying security were not less than a given price. Likewise, the participant could direct that the proceeds be distributed in a particular currency, as described above; and that they be wired, mailed, or directly deposited with a specified institution. Further, the VRS preferably responds in a default language (e. g., English, or a language as determined by the plan level rules) particular to the participant, and/or the participant can be presented with a menu prompting for entry of the language in which the participant would like to continue the session. Languages presently preferred for implementing in this system include English, Spanish, German, French, Italian, Portuguese, Dutch, Mandarin (Chinese), Japanese, Tagalog (Phillipines), and Malay (Malaysia); other languages can be used or implemented as a particular plan or administrator requires. Similarly, a web site can allow the participant to continue their session on web pages with their particularly preferred language.
As mentioned in various places above, the present system can generate any number of reports in respect of the transactions, options granted, and the like. It is preferred that, via the plan level rules, all reports for a particular client are generated in a designated language. It is particularly preferred that reports, in addition to those mentioned already, also include (i) monthly, quarterly, and/or annual statement reporting on the participants option holdings and activity, (ii) confirmations of the exercise, and (iii) confirmation of the participant's PIN and any other passwords required to access the system.
In yet another embodiment, the invention contemplates the real time execution of option exercise, as described in U. S. Pat. No. 4,674,044, entitled "Automated Securities Trading System" (the disclosure of which is incorporated herein by reference). In that system, trades to be executed are collected at the end of the day and processed for a single block trade the following trading day. In the present invention, such a system could have undesirable consequences because one or more such large trades could provide sufficient market pressure to change the price of the underlying security, most likely decreasing its price. When options are executed by insiders, the required disclosure of such exercises, coupled with changes in the underlying security price, could have a number of detriments. Accordingly, it is desirable to allow the plan participant to exercise her options in real time under the present system. With reference to FIG. 6, assuming, for example, that the participant calls in by telephone, the participant ("user" in the Figure) starts 601 by calling a predefined telephone number and navigates through various menu options using the touch tone phone keys using known technology (the Voice Response System, "VRS", mentioned above). The user enters her account number 603 which is verified 605 by the system. The user then enters her PIN at 607. The system verifies the users PIN 609 and decides whether real time trading is an election within the plan 611 by reference to the plan level rules. If real time processing is permitted, the user enters her desired order for the options to be exercised 613 (e. g., number of options to be exercised and type of exercise for all or groups thereof) and the order is processed 615. If real time trading is not permitted, the system branches 617 to process the order in a batch mode (e. g., the order will pend on the system until it can be processed in the normal course of trading). Continuing with the processing, the older is executed 619 in real time such as in the aforementioned U. S. Pat. No. 4,674,044. Afterwards, the trade is confirmed 621 and the relevant databases are updated 623 to reflect the option exercise, after which this portion of the process terminates 625.
In still another embodiment, the present invention contemplates simulations of the tax consequences of an option exercise, especially in combination with the present invention. Income to a plan participant from the exercise of options is likely taxable at the federal, state, and even local levels. To facilitate the participant's decision on how many options should be exercise, and how various options should be exercised (e. g., cashless, exchange, etc.), the invention provides a simulation of the tax consequences of a particular manner of exercising the options. The simulation can be performed at a workstation at which a broker can view/run the simulation and communicate with the participant, or, more preferably, the participant can access the simulation via telephone and use of a menuing system or via modem (e. g., a page on the web poison of the internet, or on a bulletin board by direct modem connection). By performing one or more simulations with different parameters, the participant can better decide how the options should be exercised. In an embodiment of such a simulation, the participant first specifies the number of options to be exercised. The Net Shares of stock required for the exercise of the options is determined by: (Number of Options)-(Required Shares for Stock Swap)-(Share Withholding)-(Shares Sold)=Net Shares of Stock.
The total taxes are assigned a variable: Total Taxes=A Gross SAR Proceeds=(number of options)×(Stock Price-Grant Price)=B.
The fees/commissions due to the plan administrator and the SEC can be calculated as follows: Fees/Commissions and Residual Proceeds Step 1 A - B = C If C > 0 Then [(Stock Sale Proceeds - Option Reimbursement) - C] = Net Gain If C < 0 Than Negative (C) = Residual SAR Proceeds Step 2 Commissions Calculation Net Gain/Stock Prices × (Plan Commission Schedule = X if X ≥ 0.005 then round up to the next penny, if X < 0.005 then round down. SEC Fee Calculation (Net Gain / 300) × 0.1 = SEC Fee if SEC Fee goes to thousandths place, then round up to next full hundredth. Transaction Fees (set by the plan administrator) $3.85 for only CLF for all option types except for "K" and "F". Step 3 Total Fees and Commissions Commissions + SEC Fee + Transaction Fees = Total Fees/ Commissions.
The FICA HI Taxes are calculated according to the following formula:
(Gross Gain)×FICA Hi % from payroll file)=FICA Hi Taxes Due.
FICA OAS Taxes are calculated as follows: FICA OAS Taxes Step 1 (Gross Gain) × (FICA OAS % from payroll file) = Estimated FICA Tax Step 2 (Estimated FICA Tax) + (Participant YTD FICA OAS Amount) = Subtotal FICA Step 3 (the dollar amount shown can change depending upon IRS regulations) If subtotal FICA ≤ $4054.80 Estimated FICA Tax = FICA OAS Transaction TAX If subtotal FICA > $4058.80 (Subtotal FICA) - (FICA Work 1) = FICA OAS Transaction Tax.
The SUTA and Disability Taxes are calculated according to the following formula: (Gross Gain)×(SUTA or Disability Tax Rate from Payroll File)=SUTA Taxed Due or Disability Taxes Due.
From the forgoing, the Total Taxes Due are calculated by the following formula: (Federal Taxes Due)+(Total State Taxes)+(Total Local Taxes)+(FICA Hi Taxes Due)+(FICA OAS Transaction Taxes)+(SUTA Taxes Due)+(Disability Taxes Due)=Total Taxes Due.
Thereafter, the Net Proceeds can be calculated according to the following summation: [(Credit Balance+Check Amount)+Gross Proceeds+(Shares Required×Stock Price)+Gross SAR Proceeds]=[Reimbursement+(Total Tax-Taxes from Share Withholding-Taxes Deferred)+Fees+Commissions+Residual SAR Proceeds]=Net Proceeds.
Depending upon the type of stock option granted to the participant, which type may have to be entered by the participant or broker, but preferably is in the database, the simulation determines which tax calculations are necessary according, for example, to the following criteria:
For NQO (non-qualified option): Calculate all tax calculations.
For ISO (individual stock option)
2. Only for Wilmington and Pennsylvania (exceptions, e. g.)
3. If tax deferment is NOT selected.
Then Calculate State and Local.
For DISO (deferred ISO):
Calculate State and Local regardless of whether tax deferment was selected; and then.
Calculate Federal if tax deferment is NOT selected.
Calculate all tax calculations.
Federal Taxes are calculated as Tax (Fed/Int'l)%×Gross Gain=Federal Taxes Due With the qualification that if Share Withholding is selected for tax payment, the tax rate can not be greater that 28%. International taxes can be assumed to be the same as those for the U. S. as an estimation, or specific tax calculations can be provided depending upon the participant s residence, where the proceeds are to be deposited, the location of the underlying security, and so forth.
State Taxes are calculated starting with: for states i=1 to n, Σ(R Si ×A Si ×GG i ) where R Si is the tax rate for the ith state, A Si is the state tax allocatable to the ith state, and GG i is the gross gain, to arrive at Estimated State Taxes. Thereafter, the simulation calculates the Resident State Comparison Rate for each work state individually that has a reciprocity agreement with the resident state (i. e., the state in which the participant has a legal residence for tax purposes) as follows: Resident State Comparison Rate=Work State allocation rate×resident state tax rate.
The resident state comparison rate is then compared with the work state tax rate:
(i) If comparison rate>work state tax rate, then offset rate=work state rate.
(ii) If comparison rate<work state tax rate, then offset rate=comparison rate.
The offset state taxes are calculated as equal to (Offset Rate×Gross Gain).
This procedure is repeated for each work state that has a reciprocity agreement with the resident state. After all applicable offset state taxes have been tabulated by each state, all offset state taxes are summed to arrive at a Total Offset Tax Dollars. The final resident state taxes are computed as the Estimated States Taxes for the Resident state only (i. e., the state in which the participant is a resident) minus the offset rate. The total state taxes are finally computed as the sum of the final resident state taxes plus the Estimated Taxes for all of the work states.
The Local Taxes are calculated simply for localities i=1 to n, Σ(R Li ×A Li ×GG i ) where R Li is the tax rate for the ith locality, A Li is the local tax allocatable to the ith locality, and GG i is the gross gain, to arrive at Estimated Local Taxes.
A screen accessible to the broker or to the participant (e. g., on the web portion of the internet) would preferably include the following fields:
Total Exercise Costs--This shows the sum of the option reimbursement cost, Total Tax, and Fees/Commission.
Share/Cash Withholding--Designated by the tax payment field as an indicator of whether a stock or cash disbursement is requested. If share withholding, this field will reflect the number of shares withheld. All other tax payments will reflect dollar amount of the option exercise without attached SAR taxes if applicable.
Residual SAR Proceeds--SAR proceeds not used to/from a exercise.
Pending Transaction--shows current pending transaction.
Other fields on the screen, along with some associated variables and commands (it being understood that "screen" may run to multiple screens, and that multiple screens may be used to group common or related parameters and results) are shown, along with a preferred arrangement, in the following table: Top of Screen Acct No. States client's account number Grant Date Indicated option grant date from database Grant Price Indicated grant price (strike price) for this option. Status Date Date of an employee status change. (e. g., if all 0's, the status is active and unchanged). Status Indicates type of status change; e. g., voluntary or involuntary termination, death, or retired. Available The number of options available to exercise. Options Available Available attached SAR's SAR Grant Type One letter code indicating the grant type Column One Exercise The exercise method chosen; e. g., C = \CASH, Type CLP = CASHLESS PARTIAL, CLP = CASHLESS FULL, SS = STOCK FOR STOCK Reload CASHLESS FULL, SS=STOCK Indicate a "Y"or a "N" to reload the stock option No. of The number of options to use in the transaction Options Disquali - Systematic default will be N unless a disqualifying exer - fying ISO cise is placed. An ISO will become disqualified if shares are sold and or taxes are paid with share withholding. The participant can also elect to disqualify an option. Number Total SAR's to use. of SAR's Tax The tax field will read the demographic screen fed tax field (Fed/Int'l) for domestic and aggregate tax rate for Int'l. Can adjust upward in increments of 0.1% up to 39.6% for domestic. International taxes cannot be adjusted. The Federal tax will be added to all other taxes provided in a demographic feed for calculations. Stock Price Current stock price for model Tax Payment Method for paying taxes. C = Credit Balance/Check amount, S = Share Withholding, D = Tax Deferral , and P = Stock Sale Credit Amount of cash to be used for exercise from cash balance. Balance Check Amt Total check partcipant will use to complete a cash exercise (Use in the case of wired funds as well.) Share The amount of shares used from the account to complete a Amount stock for stock exercise. Shares The amount of shares used from outside accounts to Attested complete a stock for stock exercise. Use price Indicate a "Y"or "N"if the stock price entered in the model as limit will be used as the limit price for a real time trade. Indicate "N" for market order. Column Two Exercise The type of exercise will be spelled out fully. C = Cash, Type CLP = CASHLESS PARTIAL, CLF = CASHLESS FULL, SS = STOCK FOR STOCK Net Shares The shares that will be received by the participant. The following is tlie calculation: Options - Required Shares for Stock Swap - Share Withholding - Shares Sold = Net Shares Net Proceeds Any cash that will be received by the participant from a option exercise. The following is a calculation: [(Credit Balance + Check Amount) + Gross Proceeds + (Shares Required × Stock Price) + Gross SAR Proceeds] - [Reimbursement + (Total Tax - Taxes form Share Withholding - Taxes Deferred) + fees + Commissions + Residual SAR Proceeds] = Net Proceeds SAR Information displayed whenever a SAR or a Unit Option is Proceeds exercised with the net proceeds generated from a SAR exercise or Unit surrender. The following is a calculation: (Stock Price - Grant Price) × # of SAR's - SAR taxes = SAR Proceeds Required The minimum cash needed to complete a cash exercise. Cash Amount Required Calculation of the total shares required to do a stock for Shares stock exercise. The following is a calculation: [(number for SS of options × grant price)]/stock price = required shares Stock Sale Total proceeds generated by a stock sale on a exercise Proceeds.
The above-described arrangement is merely illustrative of the principles of the present invention. Modifications and adaptations thereto will be apparent to those skilled in the art upon perusing this specification, and such are intended to be within the scope and spirit of the present invention.

Exercising stock options merrill lynch

Warner, Susan (Hamilton, NJ)
Howard, Deborah (Jackson, NJ)
Berkley, Karen (Franklin Park, NJ)
Radcliffe, Eric (Kendall Park, NJ)
A connectinist expert system for international currency option trading, Quah, T. S. et al. Nat. Univ. of Singapore, Nov. 1993.
Improved ption pricing using artificial neural networks and bootstrap and mehtods, Labjcygier, P. R. et al. International journal of Neyral Systems, vol. 8 issue:4 pp. 457-71, Aug. 1997.
Approximate option pricing, Chalasani, P. et al., 37th annual symposium Foundations of Computer Science, pp. 244-253, Jan. 1996.
The Electronic Invetor, A Big Edge for little Guys, Three packages give individual options traders some of the tools pros use, Dec. 1995.*
S&P ComStock/optionomics Systems: looking to the future with sound options risk analysis, Future, v22, n7, p28, 1993.*
Database and the Internet--Businesses flock to put live corporate, Martin Marshall, Communication Week, Feb. 1996.*
"Agreement for Services Between PepsiCo, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated dated as of Jul. 1,1990" dated Oct. 31,1990.
"Proposal to Convert Pepsico's Sharepower Plan to Merrill Lynch's Generic Stock Option Plan Administrative System, vol. One, Oct. 7, 1994" of Oct. 7, 1994.
This application is a continuation-in-part of application Ser. No. 08/487,902, filed Jun. 7, 1995, now U. S. Pat No. 5,671,363, and application Ser. No. 938,939, filed Sep. 1, 1992, now abandoned (the disclosures of which are incorporated herein by reference).
addressable data storage means for storing in relation to said accounts (i) options holding information including demographic and employment-related information on each participant and information on the options granted, vested, and exercised by each participant, and (ii) an axiomatic rule system at least in part defining said plan criteria for the exercise of said options;
communication means for entry of option transaction requests and confirmation of stored information;
processing means for accessing said storage means, receiving said transaction requests, and validating whether and how to process the options exercise requests;
brokerage means for accessing market price data on the security underlying said option and implementing said option transaction in accordance with said option holdings information and said axiomatic rule system when said transaction request is validated; e.
further comprising at least one processor system selected from the following: for.
(a) converting and disbursing currency received from implementing said option transaction into a different currency,
(b) operating said brokerage means in real time, and/or.
(c) providing a participant and/or broker accessible simulation of one or more options transactions and the expected results from the transactions prior to the actual implementation of the option transaction requested.
accessing a device for storing in relation to said accounts (i) options holding information including demographic and employment-related information on each participant and information on the options granted, vested, and exercised by each participant, and (ii) an axiomatic rule system at least in part defining said criteria for said plan in accordance with which options are exercised;
receiving from said participant option transaction requests;
processing said transaction requests, and validating whether and how to process the options exercise requests;
brokering said option transaction request in accordance with said option holdings information, said axiomatic rule system, and the participant's request when the request is validated; e.
providing at least one system selected from the following: for.
(a) converting and disbursing currency received from implementing said option transaction into a different currency,
(b) brokering the transaction in real time, and/or.
(c) simulating one or more options transactions and outputting the expected results from the transactions prior to the actual implementation of the option transaction requested.
storing the identity of each client;
storing the identity of each participant for each said client;
creating one or more accounts, each said account associated with a participant;
storing information in each said account regarding stock options held by said participant under the stock option plan; said information comprising:
the number of shares of stock remaining for each said stock option that may be executed;
the strike price of each said stock option; e.
a target price at which each said stock option is to be executed, said target price set by an axiomatic rule system;
monitoring current market prices for all said companies;
comparing the current market prices with said stored target prices;
executing a trade on each said stock option when the market price equals or exceeds said target price; e.
wherein trades are executed by accumulating orders from each Ith participant of said J clients and exercising said orders in blocks.
performing at least one step selected from the following:
(a) converting and disbursing currency received from implementing said option transaction into a different currency;
(b) brokering the transaction in real time; e / ou.
(c) simulating one or more options transactions and outputting the expected results from the transactions prior to the actual implementation of the option transaction requested.
BACKGROUND OF THE INVENTION.
The present invention generally relates to computer controlled account management systems for stock option management, and more particularly to a data processor for implementing a management control system for tracking and processing a plurality of segmented stock option accounts corresponding to individual participants in a company sponsored stock ownership plan.
For many years, publicly owned companies have provided payment to upper level executives in the form of options to purchase shares of stock in the company for whom they were employed at discounts from the prevailing market price. These stock options are attractive for many reasons. For one, the option is a form of deferred payment that provides certain tax benefits and allows the individual to control the times during which the income is derived. In addition, the opportunity to buy stock in the company is an additional incentive to the option recipient to work to increase the value of the company, and so also the value of the stock options.
Early forms of option plans were limited in scope and available only to a handful of key executives. Indeed, the use of options as a form of compensation was routinely limited to the officers of a corporation, while the remaining employees were either granted stock pursuant to pension plans or, more often than not, unable to participate in company sponsored ownership. As alternative forms of compensation grew in popularity, companies were increasingly interested in providing payment to select employees in untraditional forms. Concepts such as flex time, position sharing, benefit tailoring, and others became the terminology of personnel departments for mechanisms to address staffing needs in a cost efficient manner.
More recently, companies are examining the possible broader use of stock option-based compensation to cover greater numbers of employees in order to stretch out staffing dollars and to provide remuneration to employees in a form particularly desired by many staff members. Although greeted with substantial enthusiasm, the problems in implementing a company sponsored stock option plan are daunting. As the number of participants grows, tracking salient data becomes increasingly complex. For the most part, companies are not equipped to handle the transactional attributes of stock option processing on a scale above a handful of participants. Each of the options (or each block of options) for each grant to each participate in the plan must be individually tracked for proper delineation of such parameters as the granting, vesting, exercise, and expiration dates, and the particular strike price for which the option right was granted. Also, the practical exercise of an option requires the use of a brokerage house and an established exchange for trading and consummating the options and the underlying security in accordance with the plan attributes.
The complexities of option account processing increase disproportionately when more than one company is involved; this is especially true for multinational companies working within the borders of multiple countries--each with its own set of legal requirements on stock ownership and tax consequences for resident employees. Heretofore, there has been an absence of processing capabilities available to address the management of a multi-country, multi-company stock option account compensation plan for a plurality of individual accounts. In addition, stock option plans for multinational corporations, or for multinational employees (i. e., employees who work for one or more companies in two or more countries), have the added practical problem of exercising options where the underlying security and the funds are in different currencies.
Besides currency differences, from the participant's point of view there can be significant uncertainties in how to exercise options because options may be granted in qualified (i. e., qualifying for preferential tax treatment) or non-qualified plans, and the option may be exercised so that the participant receives the underlying security, a cash disbursement representing essentially (less taxes, commissions, and fees) the difference between the strike price and the then present market price of the underlying security, or some combination thereof. It would be beneficial to the participant if she could simulate various financial outcomes (e. g. including estimated taxes, fees, or cash disbursements, or combinations thereof) to arrive at what is best for the participants financial needs precipitating exercise of the options.
OBJECTS AND SUMMARY OF THE INVENTION.
It is an object of the present invention to provide a data processing system for managing a plurality of individual accounts directed to the holding and transacting of options for the purchase of securities in accordance with pre-established plan criteria.
It is another object of the present invention to provide a data processing apparatus for managing the implementation of one or more company stock option plans on a continuous basis.
A further object of the present invention to provide a system for processing plan constraints in a manner to provide responsive transactions in accordance with plan dictates and select inputs from plan participants.
An additional object of the present invention to provide a cashless transaction for the exercise of vested options in accordance with plan terms, through the use of a linked brokerage account for the plan participants.
Still further objects of this invention include providing such apparatus and systems that can function across currency differences, provide option execution in real time, allow the participant to simulate different exercise scenarios to define the desired parameters for the execution of the options, or a combination thereof.
The above and other objects of the present invention are realized in a data processing system including controlling stored programming directed to the managing and tracking of a plurality of individual accounts, current stock pricing, individual biographic data, company option plans and current withholding and other tax requirements. For each participant in a given plan, the system tracks the number of options to purchase stock that have been granted, the grant date, the number vested and vest date, and the number expired and date of expiration. At participant determined dates, the system implements a participant requested exercise of select options in accordance with the governing plan, e. g., option price, withholding percent, etc.
In accordance with the varying attributes of the present invention, the system uses a corresponding brokerage account held in the participant's name to implement the actual trades of stock necessary for the option exercise, with the market sale price on the exchange used to pay the plan sponsor (company) the option price, and remaining proceeds as compensation to the participant.
The foregoing features of the present invention may better appreciated from the following detailed description of a specific illustrative embodiment thereof, presented in conjunction with the following drawings:
DESCRIPTION OF THE FIGURES.
FIG. 1 provides a functional block diagram of the operative activities encompassed by the present invention;
FIG. 2 provides a logic flowchart of the participant attribute module of the present invention;
FIGS. 3A and 3B provide logic flowcharts of the daily transaction processing implemented by the present invention;
FIG. 4 depicts a logic flowchart of the option exercise module of the present invention; e.
FIG. 5 provides a flowchart for the cumulative trading of shares in accordance with the instructions from participants on a plan or client basis.
FIG. 6 depicts a flowchart showing a sequence of steps by which the participant can exercise options in real time and other actions taken by the present system.
DETAILED DESCRIPTION OF SPECIFIC EMBODIMENTS.
First briefly in overview, the present invention is directed to managing the operations associated with the broad scale implementation of individual stock option accounts for different companies and in accordance with distinct plans. The implementation is governed by an integrated control program implementing commands in response to program logic and current environmental inputs. The system maintains in memory records of participating individuals having present or future rights to exercise options of select stock, as well as a plurality of distinct option plans that dictate the implementation of the plan participants' rights in exercising the options granted to the participants. Processing is both time-driven and event-driven; for example, periodic updates to the participant's records occur at regular (preferably at least daily) intervals. In addition, select inputs preferably trigger system processing, e. g., option exercise request or target price acquisition.
A sophisticated data processing system is used for this implementation, which preferably includes one or more microprocessor-based central processor units (cpu) interconnected with multiple I/O (input/output) controllers, segmented memory in both semiconductor and magnetic disk form (i. e., immediate memory and permanent storage), communication ports for distributed processing and real time input communication for, e. g., incoming stock quotes (i. e., real time quotation of the option's underlying security price). The controlling program can be written in various commercially well-known programming languages (e. g., Cobol, "C", Pascal, etc.), as long as the resulting executable version is compilable in a manner compatible with hardware selected for the central processor and any peripheral work stations. For example, excellent results can be expected implementing this invention using Cobol II programmed and running on an IBM 3090 (Sierra) system platform.
With the foregoing overview in mind, attention is directed to FIG. 1 which provides a block diagram of the processing relationship between the various institutions involved in the operation of the present invention. More particularly, the system proprietor operates the system at a centralized location, block 10 where the central processing hardware is maintained. As stated above, the invention is directed to a plurality of separate accounts involving at a minimum segregated files on the participant and participant's brokerage account. This will of course require database 20 for maintenance of past and updated account files.
Continuing with FIG. 1, the individual blocks are interconnected with lines indicating channels of communication. For example, each participant 30 has access to a corresponding account record via system management and may use this channel for entering option exercise orders, submit cash for execution, or request records for tax purposes. The system proprietor is operating the system for the benefit of one or more separate client companies, block 40, each with a diverse set of processing requirements for their respective group of employees. In this regard, the system incorporates communication channels for the client 40, the participants 30, and the system manager 10.
Actual transactions made in accordance with the dictates of the present invention are processed practically through one or more transfer agents 50, typically a bank or other trustee formed for the transactions involved. The transfer agent releases newly issued or treasury shares of stock in the client company, which are passed to the system manager (or associated broker) either directly or through a depository trust company (DTC), block 55. Finally, the system is linked via per se well-known communications systems to one or more exchanges, block 60, for execution of the transactions of shares in accordance with plan dictates, client constraints, participant requests, and brokerage account limitations.
To understand the logic commands governing the implementation of the present inventive system, a brief description of the salient terms may be helpful and thus provided in Table 1 below:
1. Option(s). Options are granted to one or more eligible employees at a strike price set on the giant date. The options have a limited lifetime, and expire at the end of their term if not exercised. An option is a right to a purchase a set number of shares of the underlying security at the strike price.
2. Vesting Period. Options granted to an employee are not exercisable until the completion of a vesting period, typically at least one year after grant date. Sponsors may specify their own vesting schedule. Accordingly, each participant may have both vested and non-vested options in her account.
3. Exercise. An option is typically exercised by paying the purchase price for up to the number of shares granted in the option at the strike price, so the person exercising the option then owns the underlying security. Option exercise methods for employee stock option plans typically include stock swap, traditional participant cash payments from private resources, as well as the effectively immediate sale of underlying security after exercise to pay for the grant price (also known as the "cashless" exercise method because the participant need not actually buy and then sell the stock; the participant effectively receives what would have been the disbursement for such a transaction). For global operations, the system must implement country specific restrictions that may inhibit cash or cashless transactions by law.
4. Income. Upon exercise, participants realize cash disbursements, such as the spread between the option grant price and the exercise price (fair market value on exercise date), as taxable income. Plan sponsors typically deduct this spread as a compensation expense. The income and expense realized may be governed otherwise by IRS, SEC, and/or the particular plan regulations. Participants can also defer income by exercising the option and receiving the stock.
5. Withholding Taxes. Taxes on each participant's exercise income are withheld at rates specified by the plan sponsor. Funds to pay withholding taxes are raised through the sale of a number of the shares obtained through the exercise, share withholding, cash on deposit, or swapping of shares of stock already owned, with the resulting funds forwarded to the plan sponsor for payment to taxing authorities.
6. Brokerage Services. Each participant is required to open a brokerage account to facilitate exercises. The net number of shares obtained through the exercise is deposited into the account. Participants may hold the shares or sell them at their convenience.
7. Exercise Costs. Each exercise entails a variety of possible exercise costs, against which some percentage of the shares obtained on exercise are sold.
These costs can include:
Preço da opção. Participants owe their employer, which issues the stock they receive on exercise, the option price times the number of options being exercised. (e. g., 100 options with a grant price of $37.50 equal an option price of $3,750.00.)
Withholding Taxes. As described above, the spread on an option is taxable as ordinary income. Some option awards and international participants, however, may not be subject to taxation on this income.
Comissões e taxas. The exercise of stock option and sale of shares to cover exercise costs entail transaction fees. Plan sponsors may choose to pay these commissions and fees on behalf of their stock option plan participants, or specify that participants pay for these through a cash or stock deposit or through the sale of shares obtained from the exercise.
Now turning to FIG. 2, the set up module is presented in flowchart delineating the entry of set up data for a new or updated client/participant account file and associated operations. More particularly, logic begins at block 100 and branches to the database manager module. This manager system permits access to the database of existing accounts, clients and participant records for retrieval and update purposes. As the population of clients/participants grow, the database manager will be automatically invoked via the link to system management for update processing.
For the purposes of the present discussion, the database manager is used to add new records and files for new client and/or participants and update existing files via test 120. A positive response to test 120 (indicating a new client entry, i. e., a new company interested in starling a plan for its participating employees that permit the granting and transacting of stock options on an ongoing managed basis) branches logic to block 130 wherein a designated addressable file location is allocated in the database for client profile parameters; these parameters as ascertained by the system manager are then entered at block 140.
The exemplified system described herein includes several prepackaged Plans for delineating the rights and obligations of the client to the participants regarding option processing. These Plans will be available to the new client as set forth in test 150, where a negative response invokes the selection process from the received client criteria. Based thereon, the selected Plan is entered into the database for governing future transactions for the new client. Alternatively, the client may customize a stock option Plan in accordance with the client's particular needs and interests. This is done via a positive response to test 150 and the entry of custom Plan parameters at block 170. Processing then continues to the next client (new) test 180 or to continue block 190.
Continuing with FIG. 2, assuming a negative response to test 120, logic branches to test 200 which identifies whether the participant is new or existing within the database for that client. A positive response to test 200 (new participant) continues to block 210 for open/entry of a new record corresponding to that participant. The participant is then logically concatenated to the proper client, block 220 thus inheriting all the client delineated option Plan features previously entered for that client. Thereafter, the system seeks the remaining defining parameters for that participant for storage within the addressable database record, block 230. This continues for the next participant entry in que, test 280.
If the participant is already in the system ("no" to test 200), logic branches to test 240 to determine if a status change has been made to the participant's file. A status change is directed to the parameters stored for that participant and can include biographic, demographic or payment information such as a promotion, vesting of select options, termination, expiration of options, exercising options, or other changes. If a positive response is received, the salient records are accessed, block 250, and the appropriate changes entered into the records, block 260.
In the foregoing logic structure, the client and participant are system-defined through a specified option Plan and in fact this Plan may be modulated and incremented in accordance with the client so that a plurality of differing Plans are implemented by the system (e. g., Plan(I), wherein I is an indexing variable for the differing clients using the option management system). In this context, the Plan can incorporate the profile of information shown in Table II in the processing of option accounts for the various participants. Each plan managed by the system preferably includes (i) a set of parameters for such purposes as identifying and/or categorizing the necessary particulars for each participant and their option(s), (ii) a database containing each of these parameters, and (iii) an axiomatic system at least in part defining the plan criteria for the exercise of the options by a plan participant. TABLE II Description Resp. Size PLAN LEVEL RULES Plan name Mrking 50 Chars Plan source code Oper 9 Chars Plan stock cusip Oper 8 Chars Plan stock desciiptioil Oper 20 Chars VRS Mrking Yes or No VRS phone number Oper 999-999-9999 Annual or quarterly statements Mrking Annl or Qtrly Customer letter short name 1 Systems 20 Chars Customer letter short name 2 Systems 20 Chars Customer letter phone number Systems 999-999-9999 Account Assignment Oper Yes or No Plan active date Systems CC/YY/MM/DD Incentive Compensation Mrking Yes or No Fractional grants Mrking Yes or No Allow zero grants Mrking Yes or No Payroll data required for exercise Mrking Yes or No Maximum year to date exercises Mrking 999 Minimum exercise amount Mrking 9,999,999.9999 Maximum exercise amount Mrking 9,999,999.9999 Target price exercise duration (d) Mrking 999 Exercise blackout start date Mrking CC/YY/MM/DD Exercise blackout end date Mrking CC/YY/MM/DD Limit price % Mrking 9.9999 1st sale inflation % Mrking 9.9999 1st sale minimum commission Mrking 999.99 1st sale commission % Mrking 9.9999 2nd sale inflation % Mrking 9.9999 2nd sale minimum commission Mrking 999.99 2nd sale commission % Mrking 9.9999 Repeat following for each valid exercise type for the plan (max. 30 types) Exercise type Mrking 6 Chars Exercise code Systems 1 Char Exercise description Mrking 30 Chars COUNTRY RULES Country number Oper 999 Country Name Mktg 30 Chars Allow VRS exercises? Mktg Yes or No New account form required? Mktg/Legal Yes or No Force share delivery Oper/Legal Yes or No Special user authority needed Oper Yes or No Special userid's Oper 8 Chars Repeat following for each valid exercise allowed (max. 30 types) Valid exercise type Mrking 6 Chars Valid exercise code Systems 1 Char Valid exercise description Mrking 30 Chars GRANT RULES Grant date Mrking CC/YY/MM/DD Grant price Mrking 99,999.99999 Grant expiration date Mrking CC/YY/MM/DD Maximum year to date exercises Mrking 999 Minimum vesting amount Mrking 9,999,999.9999 Vested outstanding cusip Oper 8 Chars Vested outstanding account Oper 9 Chars Vested lapsed cusip Oper 8 Chars Vested lapsed account Oper 9 Chars Unvested outstanding cusip Oper 8 Chars Unvested outstanding account Oper 9 Chars Unvested lapsed cusip Oper 8 Chars Unvested lapsed account Oper 9 Chars Exercise cusip Oper 8 Chars Exercise account Oper 9 Chars EMPLOYEE STATUS RULES Status code Mrking 1 Char Status description Mrking 30 Chars Exercise cutoff amount Mrking 9999 Exercise cutoff type Mrking Years/Months/Days VESTING RULES Grant date Mrking CC/YY/MM/DD Status code Mrking 1 Char Vesting rate Mrking 9.9999 Vesting calculation type Mrking Truncate or Round Special vesting check Systems Yes or No 100% vesting date Systems CC/YY/MM/DD Repeat following for each event date (up to 25 event dates) Event vesting date Mrking CC/YY/MM/DD Event vesting date Mrking 9.9999.
In the above Plan profile, the column "Resp." indicates the specifying division of the system proprietor responsible for the variable data, e. g., "marketing". VRS represents a Voice Response System that allows direct phone link to the system options for the participant via touch-tone entry, preferably in multiple languages. The column "Size" indicates an embodiment of the record format size and/or format for database management.
Additional plan level rules (or other rules) can be implemented as required by a particular system or which the administrator requires or desires. For example, other preferred plan level riles include the type of option grant, an option grant suffix, whether real-time trading (described below) is allowed by the plan for the participant, and the particular currency type (e. g., foreign currency transactions, as described below), the language in which the VRS responds as a default when the participant phones, termination letters, and option expiration letters. The option grant suffix is useful when, such as preferred herein, the system recognizes options by their grant date because different types of options, or options having different conditions for exercise, may be granted to the participant on the same date; hence, the suffix can permit the system to distinguish between different types of options granted to the same participant on the same date. The parameters for termination letters and option expiration letters are equivalent to toggles prompting whether the system should issue letters to the participant as notification, respectively, that participation in the plan has been terminated (and, for example, how the options can be exercised in the future) and that particular option(s) granted are due to and/or have expired. Similarly, the grant rules can include parameters for the option grant type and the option grant suffix.
With the above Plan structure for illustration, attention is now directed to FIG. 3 depicting the logic path for the inventive system associated with periodic (daily) account processing. Beginning at block 400, logic uploads the system module at block 410. The system module governs the processing of accounts on the periodic or input driven basis. In this context, input driven processing is exemplified by a transaction request received by telephone from a participant. Periodic processing is time based (e. g., daily) and functions to control time based processing of accounts--for example the removal of vested options after the expiration of a Plan delineated termination period for the option. Other time based processing will include the comparison of current stock price on an exchange with a specified target price in a participant's file with a contingent transaction automatically executed if the price-quote comparison is satisfied. In this context, the current stock price corresponds to some recently completed and fixed transaction, such as "end of day" pricing. Other market pricing techniques may be employed.
Continuing in FIG. 3, at blocks 420 and 430 the system accesses the participant files in sequence for processing in accordance with the Plan dictates for the entered Date. Test 440 determines whether the participant/plan files delineate a grant date for the option account. If so ("yes"), logic proceeds to blocks 450-490 wherein the Plan is accessed and used to quantify and confirm the option grant, calculate vest and optionally option price for the newly granted options and update the participant files in accordance therewith.
At test 500, the system determines if the date of processing is a vesting date for that Ith participant; if so, logic proceeds to blocks 510-540 for processing the participant records in accordance with the Plan and specifically updating the options (vested) available for transacting by the participant. The records for the Ith participant are updated with the new information replacing the existing files in the database.
Plan constraints often include time periods for exercising vested options. Therefore, after the passage of time, unexercised vested options will expire. The system module determines this at test 550 for each participant (unless the Plan for that participant has no time based option expiration function). A positive response to test 550 branches to blocks 560-590 wherein the Plan is accessed and the associated expired options removed from the participant's account.
As discussed above, exercise of options by the participant may be accomplished by both direct request or by a time function; this latter course involves the setting of a target price for the shares that is above the current market price, and the setting of transaction time period in terms of start time (or date) and span (duration of requested price delineated transactions). Once evoked, the system must continuously (implemented in incremental updates) receive market data for direct comparison to the target price, and automatically execute the requested transaction upon satisfaction of the target-market price comparison.
The foregoing is accomplished as follows. At test 600, the system determines if a target price exercise older has been entered for the user and if so the target price, TP(I) and the duration DD(I) for the Ith participant, block 610. The system then accesses the current quote for the specified security, defined as MAR_P(D), at block 620 and compares this price data at test 630. If the comparison criteria is met, logic proceeds to block 640 where the system links to an exchange for automatic execution of the options exercised. The participant's account is then updated at block 650. If test 630 is not satisfied, no transaction is authorized for this period and the participant's file is updated accordingly at block 660. The system then increments to the next participant (I+1) for further processing at block 670.
In addition to the entry of time-driven exercise orders, the system preferably can processes exercise orders on an order receipt basis, i. e., older-driven processing as opposed to event-driven processing. In this mode of operation, for example, the system provides two forms of execution to the participant with vested options, funded and cashless. The funded transaction is the traditional mechanism described above for processing options and involves the receipt from the option holder of the share price defined in the option account which is then coupled with additional funds from the option grantor for purchasing the security on the exchange at the strike price of the option. The security is then provided to the plan participant for disposition.
An alternate approach, the cashless approach, does not require any contribution by the participant and is based on the normally common occurrence of an option price that is significantly below the current market price of the security. A cashless transaction involves the disposal of shares at the market price (either treasury shares or previously purchased shares) with the proceeds divided between the client (option grantor, receiving the option price for the sold shares) and the participant (who receives the market price minus option price (i. e., MAR_P-OPT_P) multiplied by the number of shares). This transaction is considered "cashless" because no initial contribution is required by the plan participant option holder.
A third form of option exercise involves the use of stock as directly contributed by the participant to fund the exercise of the options. This stock can be sold at open market with the proceeds used to fund the execution of the option. However, more usually, the participant "swaps" an amount of stock sufficient to exercise the options, and receives the shares represented by the options minus the shares she used for the exercise. For example, if the participant has 1000 options (i. e., to purchase 1000 shares) for which the funds required for exercise are equal to the present market value of 100 shares of the same stock presently owned by the participant, the participant will receive 900 shares in a "stock swap" exercise of the options.
The foregoing transactions are accomplished by the present system in accordance with FIG. 4. Beginning with start block 700, logic proceeds to block 710 and input of the current queued request for the Ith participant. At test 720, the system first confirms that the participant order is proper, i. e., the current records reflect possession of vested options to support the exercise request for that participant; other confirmation data may be accessed for foreign security laws on ownership, etc. as may be needed.
Assuming a negative response to test 720, logic continues to test 740 wherein the system determines the form of the transaction, i. e., cashless or funded. If the 45 funded request is selected by the participant, logic branches to test 750 to confirm receipt of the necessary funds to support the purchase. As stated earlier, all transactions are based on the use of a concurrent brokerage account and the requisite funds may be established by one of several mechanisms such as margin on existing shares etc. If the transaction as requested is unfunded, ("no" to test 750) the system stops execution of the older and prepares a report, block 760.
If the transaction is fully funded, the system enters the participant selected target price for the transaction, TP(I) and recalls the current market price, MAR_P(D) at blocks 780 and 790 respectively. Test 800 compares the prices for the security with automatic execution of the transaction instituted upon satisfaction of the test via blocks 810-830. The target price may be and often is set at the current market price by the participant to insure execution of the option (i. e., test 800 always satisfied).
Continuing with FIG. 4 and assuming selection of the cashless exercise, processing proceeds to block 840 for the entry of the target price by the participant. Again the system accesses the current market price for that security and compares this value to the selected target price and additionally the stored option price for that participant. This latter test condition is required as the TP(I) must also support the payment of the option price and the accrued transaction fees pursuant to the designated cashless transaction. Satisfaction of this bifurcated conditional permits automated order execution via the brokerage account for that participant, blocks 870 and 880. Logic then proceeds to the next order in the queue.
Although the entry of option exercise instructions are made on an individual participant basis, the actual implementation of these transactions is done on a client/security basis, i. e., transactions for a given security are accumulated so that the actual trade order that reaches the exchange comprises many individual orders combined. The method of accumulation is not critical and may proceed by either a set time period or by volume of transactions in given securities.
This accumulation process is delineated in FIG. 5. At select intervals, the system begins the transaction procedure via start block 1000, confirming the transaction period at test 1010. A "yes" to test 1010 starts the transaction entry process; each plan is accessed and each participant incremented by indexing variables "J" and "I" respectively, blocks 1020-1040. At block 1050, the system accesses the transaction request REQ(I) for the Ith participant. If this REQ is confirmed at test 1060 (meets plan constraints and target price considerations), the system accumulates the optioned shares into the total for that security, block 1070, wherein TSO(J) represents the total stock options for the Jth security and ISO represents the individual stock options REQ by the Ith participant. Logic continues for each Ith participant and Jth Plan with the retention of TSO(J) for all J's in the system, blocks 1080-1100. These collected and confirmed orders are then sent to the exchange for execution, block 1110.
Continuing with FIG. 5, test 1120 confirms that the order as entered on the exchange was executed per instructions. A positive response to test 1120 is followed by system file update with the new information, block 1130. If the order cannot be confirmed, the system determines whether the a price limit failure occurred, test 1160. A price limit prevents a rapidly shifting market from causing a negative cash transaction by assuring that the market price received for the security is sufficient to cover the option price plus whatever incidentals may accrue. If a price limit triggered an aborted trade, a report is generated, block 1180; if the trade failed for some other reason (e. g., trading stopped for that security on the exchange) the system contacts the broker to complete the report, block 1170. This ends the processing until the next period or volume limit is reached, block 1150.
With the proliferation of multinational corporations and employees who may likely be working in various countries during their tenure with one or more international companies, the invention also allows for the management of stock option plans where the money used for the exercise transaction, and/or for the disbursement of proceeds (e. g., "cashless" execution of the option), are in different currencies. In such a system, the participant requests (i) the form of option exercise desired (e. g., cashless, regular sale, or cash balance disbursement), (ii) that the proceeds are to be distributed in a particular currency eligible for the plan, and (iii) the desired method of disbursement (e. g., cash or wire transfer). The exercise of the option proceeds as described above with the additional input that the broker (or participant, as described below) enters to indicate that a "foreign" currency transaction is requested, and how the funds are to be disbursed. Preferably, wire transfer instructions and information must be provided by the plan participant prior to execution of this foreign currency transaction; otherwise, measures can be implemented to allow the participant to submit wire transfer authorization and for the broker (or customer service representative) to enter and confirm that information during the participant's online modem or telephone session. The option exercise then proceeds as described above with a disbursement monetary value generated that is due to the participant as well as the type of currency with which the option was exercised and the type of currency that the participant desires to be disbursed. If the two currency types are different, the system queries a database (present in the system or remote accessible online via a service provider) for the exchange rate between the two currencies, and generates a value of the disbursement in the currency type requested by the customer. Preferably, the system also generates a transaction fee for the currency exchange based on a standard rate or such other terms as the plan manager may require or may have agreed with the company whose options are being managed. The system also preferably generates output reports for the manager and/or the participant and/or the company regarding wire transfers and/or currency rate reports (including any applicable exchange transaction fee(s)).
In another embodiment of this invention, it is preferably contemplated that a participant engages the system and exercises vested options without directly contacting a broker. As such, the participant can access the system on a bulletin board directly via modem, a hypertext page (preferably via secure server protocol) on the web portion of the internet, or a menu system via touch-tone telephone as mentioned above. The participant would be required to enter account information and one or more passwords (e. g., a PIN, a personal identification number). Thereafter, the participant enters, for example, information indicative of the particular options to be exercised and, optionally, trading, currency, and/or proceed distribution instructions. For example, the participant can direct the system to exercise specified options only if the price of the underlying security were not less than a given price. Likewise, the participant could direct that the proceeds be distributed in a particular currency, as described above; and that they be wired, mailed, or directly deposited with a specified institution. Further, the VRS preferably responds in a default language (e. g., English, or a language as determined by the plan level rules) particular to the participant, and/or the participant can be presented with a menu prompting for entry of the language in which the participant would like to continue the session. Languages presently preferred for implementing in this system include English, Spanish, German, French, Italian, Portuguese, Dutch, Mandarin (Chinese), Japanese, Tagalog (Phillipines), and Malay (Malaysia); other languages can be used or implemented as a particular plan or administrator requires. Similarly, a web site can allow the participant to continue their session on web pages with their particularly preferred language.
As mentioned in various places above, the present system can generate any number of reports in respect of the transactions, options granted, and the like. It is preferred that, via the plan level rules, all reports for a particular client are generated in a designated language. It is particularly preferred that reports, in addition to those mentioned already, also include (i) monthly, quarterly, and/or annual statement reporting on the participants option holdings and activity, (ii) confirmations of the exercise, and (iii) confirmation of the participant's PIN and any other passwords required to access the system.
In yet another embodiment, the invention contemplates the real time execution of option exercise, as described in U. S. Pat. No. 4,674,044, entitled "Automated Securities Trading System" (the disclosure of which is incorporated herein by reference). In that system, trades to be executed are collected at the end of the day and processed for a single block trade the following trading day. In the present invention, such a system could have undesirable consequences because one or more such large trades could provide sufficient market pressure to change the price of the underlying security, most likely decreasing its price. When options are executed by insiders, the required disclosure of such exercises, coupled with changes in the underlying security price, could have a number of detriments. Accordingly, it is desirable to allow the plan participant to exercise her options in real time under the present system. With reference to FIG. 6, assuming, for example, that the participant calls in by telephone, the participant ("user" in the Figure) starts 601 by calling a predefined telephone number and navigates through various menu options using the touch tone phone keys using known technology (the Voice Response System, "VRS", mentioned above). The user enters her account number 603 which is verified 605 by the system. The user then enters her PIN at 607. The system verifies the users PIN 609 and decides whether real time trading is an election within the plan 611 by reference to the plan level rules. If real time processing is permitted, the user enters her desired order for the options to be exercised 613 (e. g., number of options to be exercised and type of exercise for all or groups thereof) and the order is processed 615. If real time trading is not permitted, the system branches 617 to process the order in a batch mode (e. g., the order will pend on the system until it can be processed in the normal course of trading). Continuing with the processing, the older is executed 619 in real time such as in the aforementioned U. S. Pat. No. 4,674,044. Afterwards, the trade is confirmed 621 and the relevant databases are updated 623 to reflect the option exercise, after which this portion of the process terminates 625.
In still another embodiment, the present invention contemplates simulations of the tax consequences of an option exercise, especially in combination with the present invention. Income to a plan participant from the exercise of options is likely taxable at the federal, state, and even local levels. To facilitate the participant's decision on how many options should be exercise, and how various options should be exercised (e. g., cashless, exchange, etc.), the invention provides a simulation of the tax consequences of a particular manner of exercising the options. The simulation can be performed at a workstation at which a broker can view/run the simulation and communicate with the participant, or, more preferably, the participant can access the simulation via telephone and use of a menuing system or via modem (e. g., a page on the web poison of the internet, or on a bulletin board by direct modem connection). By performing one or more simulations with different parameters, the participant can better decide how the options should be exercised. In an embodiment of such a simulation, the participant first specifies the number of options to be exercised. The Net Shares of stock required for the exercise of the options is determined by: (Number of Options)-(Required Shares for Stock Swap)-(Share Withholding)-(Shares Sold)=Net Shares of Stock.
The total taxes are assigned a variable: Total Taxes=A Gross SAR Proceeds=(number of options)×(Stock Price-Grant Price)=B.
The fees/commissions due to the plan administrator and the SEC can be calculated as follows: Fees/Commissions and Residual Proceeds Step 1 A - B = C If C > 0 Then [(Stock Sale Proceeds - Option Reimbursement) - C] = Net Gain If C < 0 Than Negative (C) = Residual SAR Proceeds Step 2 Commissions Calculation Net Gain/Stock Prices × (Plan Commission Schedule = X if X ≥ 0.005 then round up to the next penny, if X < 0.005 then round down. SEC Fee Calculation (Net Gain / 300) × 0.1 = SEC Fee if SEC Fee goes to thousandths place, then round up to next full hundredth. Transaction Fees (set by the plan administrator) $3.85 for only CLF for all option types except for "K" and "F". Step 3 Total Fees and Commissions Commissions + SEC Fee + Transaction Fees = Total Fees/ Commissions.
The FICA HI Taxes are calculated according to the following formula:
(Gross Gain)×FICA Hi % from payroll file)=FICA Hi Taxes Due.
FICA OAS Taxes are calculated as follows: FICA OAS Taxes Step 1 (Gross Gain) × (FICA OAS % from payroll file) = Estimated FICA Tax Step 2 (Estimated FICA Tax) + (Participant YTD FICA OAS Amount) = Subtotal FICA Step 3 (the dollar amount shown can change depending upon IRS regulations) If subtotal FICA ≤ $4054.80 Estimated FICA Tax = FICA OAS Transaction TAX If subtotal FICA > $4058.80 (Subtotal FICA) - (FICA Work 1) = FICA OAS Transaction Tax.
The SUTA and Disability Taxes are calculated according to the following formula: (Gross Gain)×(SUTA or Disability Tax Rate from Payroll File)=SUTA Taxed Due or Disability Taxes Due.
From the forgoing, the Total Taxes Due are calculated by the following formula: (Federal Taxes Due)+(Total State Taxes)+(Total Local Taxes)+(FICA Hi Taxes Due)+(FICA OAS Transaction Taxes)+(SUTA Taxes Due)+(Disability Taxes Due)=Total Taxes Due.
Thereafter, the Net Proceeds can be calculated according to the following summation: [(Credit Balance+Check Amount)+Gross Proceeds+(Shares Required×Stock Price)+Gross SAR Proceeds]=[Reimbursement+(Total Tax-Taxes from Share Withholding-Taxes Deferred)+Fees+Commissions+Residual SAR Proceeds]=Net Proceeds.
Depending upon the type of stock option granted to the participant, which type may have to be entered by the participant or broker, but preferably is in the database, the simulation determines which tax calculations are necessary according, for example, to the following criteria:
For NQO (non-qualified option): Calculate all tax calculations.
For ISO (individual stock option)
2. Only for Wilmington and Pennsylvania (exceptions, e. g.)
3. If tax deferment is NOT selected.
Then Calculate State and Local.
For DISO (deferred ISO):
Calculate State and Local regardless of whether tax deferment was selected; and then.
Calculate Federal if tax deferment is NOT selected.
Calculate all tax calculations.
Federal Taxes are calculated as Tax (Fed/Int'l)%×Gross Gain=Federal Taxes Due With the qualification that if Share Withholding is selected for tax payment, the tax rate can not be greater that 28%. International taxes can be assumed to be the same as those for the U. S. as an estimation, or specific tax calculations can be provided depending upon the participant s residence, where the proceeds are to be deposited, the location of the underlying security, and so forth.
State Taxes are calculated starting with: for states i=1 to n, Σ(R Si ×A Si ×GG i ) where R Si is the tax rate for the ith state, A Si is the state tax allocatable to the ith state, and GG i is the gross gain, to arrive at Estimated State Taxes. Thereafter, the simulation calculates the Resident State Comparison Rate for each work state individually that has a reciprocity agreement with the resident state (i. e., the state in which the participant has a legal residence for tax purposes) as follows: Resident State Comparison Rate=Work State allocation rate×resident state tax rate.
The resident state comparison rate is then compared with the work state tax rate:
(i) If comparison rate>work state tax rate, then offset rate=work state rate.
(ii) If comparison rate<work state tax rate, then offset rate=comparison rate.
The offset state taxes are calculated as equal to (Offset Rate×Gross Gain).
This procedure is repeated for each work state that has a reciprocity agreement with the resident state. After all applicable offset state taxes have been tabulated by each state, all offset state taxes are summed to arrive at a Total Offset Tax Dollars. The final resident state taxes are computed as the Estimated States Taxes for the Resident state only (i. e., the state in which the participant is a resident) minus the offset rate. The total state taxes are finally computed as the sum of the final resident state taxes plus the Estimated Taxes for all of the work states.
The Local Taxes are calculated simply for localities i=1 to n, Σ(R Li ×A Li ×GG i ) where R Li is the tax rate for the ith locality, A Li is the local tax allocatable to the ith locality, and GG i is the gross gain, to arrive at Estimated Local Taxes.
A screen accessible to the broker or to the participant (e. g., on the web portion of the internet) would preferably include the following fields:
Total Exercise Costs--This shows the sum of the option reimbursement cost, Total Tax, and Fees/Commission.
Share/Cash Withholding--Designated by the tax payment field as an indicator of whether a stock or cash disbursement is requested. If share withholding, this field will reflect the number of shares withheld. All other tax payments will reflect dollar amount of the option exercise without attached SAR taxes if applicable.
Residual SAR Proceeds--SAR proceeds not used to/from a exercise.
Pending Transaction--shows current pending transaction.
Other fields on the screen, along with some associated variables and commands (it being understood that "screen" may run to multiple screens, and that multiple screens may be used to group common or related parameters and results) are shown, along with a preferred arrangement, in the following table: Top of Screen Acct No. States client's account number Grant Date Indicated option grant date from database Grant Price Indicated grant price (strike price) for this option. Status Date Date of an employee status change. (e. g., if all 0's, the status is active and unchanged). Status Indicates type of status change; e. g., voluntary or involuntary termination, death, or retired. Available The number of options available to exercise. Options Available Available attached SAR's SAR Grant Type One letter code indicating the grant type Column One Exercise The exercise method chosen; e. g., C = \CASH, Type CLP = CASHLESS PARTIAL, CLP = CASHLESS FULL, SS = STOCK FOR STOCK Reload CASHLESS FULL, SS=STOCK Indicate a "Y"or a "N" to reload the stock option No. of The number of options to use in the transaction Options Disquali - Systematic default will be N unless a disqualifying exer - fying ISO cise is placed. An ISO will become disqualified if shares are sold and or taxes are paid with share withholding. The participant can also elect to disqualify an option. Number Total SAR's to use. of SAR's Tax The tax field will read the demographic screen fed tax field (Fed/Int'l) for domestic and aggregate tax rate for Int'l. Can adjust upward in increments of 0.1% up to 39.6% for domestic. International taxes cannot be adjusted. The Federal tax will be added to all other taxes provided in a demographic feed for calculations. Stock Price Current stock price for model Tax Payment Method for paying taxes. C = Credit Balance/Check amount, S = Share Withholding, D = Tax Deferral , and P = Stock Sale Credit Amount of cash to be used for exercise from cash balance. Balance Check Amt Total check partcipant will use to complete a cash exercise (Use in the case of wired funds as well.) Share The amount of shares used from the account to complete a Amount stock for stock exercise. Shares The amount of shares used from outside accounts to Attested complete a stock for stock exercise. Use price Indicate a "Y"or "N"if the stock price entered in the model as limit will be used as the limit price for a real time trade. Indicate "N" for market order. Column Two Exercise The type of exercise will be spelled out fully. C = Cash, Type CLP = CASHLESS PARTIAL, CLF = CASHLESS FULL, SS = STOCK FOR STOCK Net Shares The shares that will be received by the participant. The following is tlie calculation: Options - Required Shares for Stock Swap - Share Withholding - Shares Sold = Net Shares Net Proceeds Any cash that will be received by the participant from a option exercise. The following is a calculation: [(Credit Balance + Check Amount) + Gross Proceeds + (Shares Required × Stock Price) + Gross SAR Proceeds] - [Reimbursement + (Total Tax - Taxes form Share Withholding - Taxes Deferred) + fees + Commissions + Residual SAR Proceeds] = Net Proceeds SAR Information displayed whenever a SAR or a Unit Option is Proceeds exercised with the net proceeds generated from a SAR exercise or Unit surrender. The following is a calculation: (Stock Price - Grant Price) × # of SAR's - SAR taxes = SAR Proceeds Required The minimum cash needed to complete a cash exercise. Cash Amount Required Calculation of the total shares required to do a stock for Shares stock exercise. The following is a calculation: [(number for SS of options × grant price)]/stock price = required shares Stock Sale Total proceeds generated by a stock sale on a exercise Proceeds.
The above-described arrangement is merely illustrative of the principles of the present invention. Modifications and adaptations thereto will be apparent to those skilled in the art upon perusing this specification, and such are intended to be within the scope and spirit of the present invention.

Accurate signals binary options online.
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Exercising stock options merrill lynch.
Long-Term Incentive Compensation Plan the Plan. How to Exercise Stock Options. You may exercise Stock Options through the Retirement Services Group. You must open a Limited Individual Investor Account Stock to exercise. You may submit exercise requests virtually 24 hours a day, seven options a week through the Exercising Voice Response Service IVR at [phone options. Alternatively, participant service representatives are available to help you from at least 8: Eastern Timeon any day the Exercising York Stock Exchange is open. Outside of the United Statesyou can call [phone number] collect to speak to a participant service representative from 8 a. You may also exercise your Stock Options by visiting the Benefits On Line Web-site at [URL]. Policy Manual, you will be required to merrill any sale of Merrill Lynch equity securities and lynch will be prohibited from exercising your Stock Lynch during blackout periods. This may affect your ability to exercise stock options just prior to the expiration date. If you have questions regarding your status as a restricted person and the applicable blackout period, please contact the Corporate Secretarys office. All contents of the lawinsider. View our Terms Of Use. Merrill Lynch Uses in How to Exercise Stock Options Clause Home How to Stock Stock Options Merrill Lynch How to Exercise Stock Options. Related uses of Merrill Lynch. By registering you agree to our terms merrill service.
2 thoughts on “Exercising stock options merrill lynch”
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Terms And Conditions Of Stock Option Grant.
Option Agreement.
This Option Agreement involves.
FEDEX CORP | FedEx Corporation.
Title: TERMS AND CONDITIONS OF STOCK OPTION GRANT.
TERMS AND CONDITIONS.
OF STOCK OPTION GRANT.
1. Stock Plan . This stock option grant is subject to the terms, definitions and provisions of the stock plan (“Plan”) designated in the grant detail on the Merrill Lynch website.
2. Option Price . The option price for each share is one hundred percent (100%) of the fair market value, as determined by the Committee (as defined in the Plan), of FedEx Corporation (“FedEx”) common stock on the date of grant.
3. Exercise of Option . The option is only exercisable in accordance with the provisions of the Plan and pursuant to the vesting schedule contained in the grant detail on the Merrill Lynch website. The option may not be exercised if the issuance of the shares upon such exercise would constitute a violation of any applicable federal or state securities or other law or regulation. As a condition to the exercise of the option, FedEx may require the employee exercising the option to make any representation and warranty to FedEx as may be required by any applicable law or regulation.
4. Designation of Certain Option Shares as Incentive Stock Options . Certain of the option shares granted may be (as permitted by the Plan) designated incentive stock options (“ISO Shares”), as that term is defined in Section 422 of the Internal Revenue Code. If, pursuant to any provision of the Plan or amendment to the grant, any of the option shares granted become exercisable sooner than stated at the time of grant, then to the extent that the aggregate fair market value (determined at the time of grant) of shares with respect to which incentive stock optio.
RealDealDocs & trade; categorizou esses documentos e os fez pesquisáveis usando a mesma tecnologia RealPractice proprietária que é implantada em alguns dos maiores escritórios de advocacia do país, para que você tenha as melhores ferramentas em qualquer lugar para aproveitar esse produto de trabalho.
Direitos autorais e cópia; 2018 RPCD Holdings LLC. Todos os direitos reservados.

Terms And Conditions Of Stock Option Grant.
Option Agreement.
This Option Agreement involves.
FEDEX CORP | FedEx Corporation.
Title: TERMS AND CONDITIONS OF STOCK OPTION GRANT.
TERMS AND CONDITIONS.
OF STOCK OPTION GRANT.
1. Stock Plan . This stock option grant is subject to the terms, definitions and provisions of the stock plan (“Plan”) designated in the grant detail on the Merrill Lynch website.
2. Option Price . The option price for each share is one hundred percent (100%) of the fair market value, as determined by the Committee (as defined in the Plan), of FedEx Corporation (“FedEx”) common stock on the date of grant.
3. Exercise of Option . The option is only exercisable in accordance with the provisions of the Plan and pursuant to the vesting schedule contained in the grant detail on the Merrill Lynch website. The option may not be exercised if the issuance of the shares upon such exercise would constitute a violation of any applicable federal or state securities or other law or regulation. As a condition to the exercise of the option, FedEx may require the employee exercising the option to make any representation and warranty to FedEx as may be required by any applicable law or regulation.
4. Designation of Certain Option Shares as Incentive Stock Options . Certain of the option shares granted may be (as permitted by the Plan) designated incentive stock options (“ISO Shares”), as that term is defined in Section 422 of the Internal Revenue Code. If, pursuant to any provision of the Plan or amendment to the grant, any of the option shares granted become exercisable sooner than stated at the time of grant, then to the extent that the aggregate fair market value (determined at the time of grant) of shares with respect to which incentive stock optio.
RealDealDocs & trade; categorizou esses documentos e os fez pesquisáveis usando a mesma tecnologia RealPractice proprietária que é implantada em alguns dos maiores escritórios de advocacia do país, para que você tenha as melhores ferramentas em qualquer lugar para aproveitar esse produto de trabalho.
Direitos autorais e cópia; 2018 RPCD Holdings LLC. Todos os direitos reservados.

Exercising stock options merrill lynch

Date: Tue, 01 Feb 2005.
If my employer is reporting the ordinary income from my ISO stock sales on Form W-2 and I report the sale on Schedule D, aren’t I being taxed twice?
Data: Qua, 09 fev 2005.
Not if you compute the cost as I explained for the last question.
Ultima questão.
Eu exerci e vendi ações da ISO no mesmo dia deste ano [presumivelmente, 2004]. My company didn’t report the income on my W-2 form. Will I get a W-2 from Merrill Lynch (which administers the plan)?
Além disso, como eu entendo, preciso relatar um ganho e perda do mesmo valor no Schedule D e relatar o ganho líquido da venda como receita W-2. O que acontece se a Merrill Lynch não enviar o W-2?
Maybe I’m wrong and the options are non-qualified?
Responda a última pergunta.
Income from exercising non-qualified options should also be reported on Form W-2.
Fale com as pessoas no departamento de folha de pagamento de seu empregador. They may be issuing a corrected Form W-2 to include the ISO income. Se eles não reportarem a receita no Formulário W-2, você pode ajustar seu salário com uma planilha de divulgação ou reportar a receita ISO como # 8220; Outros rendimentos e # 8221; at line 21, Form 1040.
Se a corretora relatar a venda de ações no Formulário 1099-B, o preço de venda deve ser reportado na Tabela D. O custo da ação é o preço da opção mais a receita ordinária reportada para a disposição desqualificada do estoque ISO. It sounds like the sale date and acquisition date are the same day.
Merrill Lynch não é o seu empregador e provavelmente não emitirá um formulário W-2 para esta transação.

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