Cashless exercise occurs when an employee decides to pay, either partially or in full, for their options and taxes by forfeiting part of their options. Carta allows company administrators to initiate this type of exercise through the following steps:
- Go to the option grants in 'Equity awards', under 'Securities'.
- Click on the right arrow in the option grant you are exercising and hit ‘Exercise (net)'. If you don’t see this option reach out to firstname.lastname@example.org to enable it.
- All input fields for the cashless exercise are required including the agreement upload.
' Tax amount' must be entered - this will be calculated into the total cost
'Total cost' is the exercise price times how many options you want to exercise
' Amount" is the shares needed to be repurchased and the cash amount, if applicable.
'Dollar value' is the calculated value of the FMV on the date of the exercise * the share quantity.
' Total cost' and the 'Total payment' must match.
*Note: only vested options can be exercised and forfeited options must be exercised before repurchased by the company.
4. Review the net exercise. If the information is accurate, click on ‘Exercise options’.
5. Under the 'Exercises' tab on the option grant, you can see all the pending and historical exercises for that option grant. In the resulting certificate under the 'Exercise record' tab, you will find specific details about the exercise.