Morgan Stanley Smith Barney offers several exercise methods for participants to exercise their stock options. Some important terms and exercise methods follow:
- Market Order: An order to sell the shares resulting from the stock options exercise at the current market price. The order will be placed immediately after the request to exercise is received and accepted. The participant will receive the net funds from the sale as per the proceeds delivery method selected.
- Limit Order: An order to exercise stock options and sell shares at a specified limit price. When the stock price reaches the limit established, the order will be submitted for execution. This type of order remains in effect until it is either executed or cancelled (Good 'til Cancelled). If the stock price never reaches the requested limit price, the option will not be exercised and the order will expire on the grant expiration day.
Cashless Exercises
Morgan Stanley Smith Barney Global Stock Plan Services supports cashless exercises resulting in either cash or shares.
A cashless exercise resulting in cash, also known as Same Day Sale or Exercise and Sell All is an exercise method where all the shares resulting from the stock option exercise are sold and the participant receives cash proceeds, net of the option cost and any applicable taxes and fees. This exercise can be placed either as a market or limit order.
A cashless exercise resulting in shares, also known as Sell to Cover (STC), is an exercise where Morgan Stanley Smith Barney calculates the option cost, applicable taxes and fees, and sells only enough shares to cover this amount. The participant receives the remaining shares. This exercise can only be placed as a market order.
Cash Exercise (also known as Exercise and Hold)
This method allows participants to use their personal savings to cover the option cost and applicable taxes of the exercise. The participant receives the total number of shares exercised.
Stock Swap Exercise
This method allows participants to exercise their options by using shares they already own (which may be subject to a holding period, based on the company's plan) to cover the exercise cost and/or taxes of the exercise. The participant receives a share balance.
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