What are my alternatives to a cashless exercise?
If you choose not to do a cashless exercise, you may do an outright exercise and hold. In this scenario, you will pay the full purchase price plus taxes to the company to pay for the shares. They will send you the shares, which you may hold until you choose to sell. This means you will have paid for the shares plus taxes out of your pocket, and you will own all exercised shares as dividend paying common shares. The final option is a combination of the cashless exercise and exercise and hold whereby you sell just enough shares to pay for exercising all of your shares plus taxes to the company. In this scenario, all proceeds from the cashless exercise of a portion of your options will be used to purchase the balance of the shares. At the end of the day, you will have a number of dividend paying shares without having to deposit any cash out of pocket.
