Share options - rights to exercise

TCD_2

Hi there,

After a long time at a company I feel it is time to move on. The company is privately owned, and as a longer term employee I was given some share options a number of years ago. These have vested, and exercise price is around £1. Latest valuation for company based on fund raising puts current price around £100/share.

This value is likely to go up in time. What rights do I have to exercise these options? Can the company refuse me paying them the exercise price and buying them or do I have the right to do that? These are EMI share options which are also subject to ER.

Any thoughts/advice appreciated.
TCD

bowlhead99

TCD wrote: »

What rights do I have to exercise these options? Can the company refuse me paying them the exercise price and buying them or do I have the right to do that?

An option implies you have a right but not an obligation to do something. If the shares have 'vested' as you mention, generally the rights are now yours to exercise, unless you are some sort of 'bad leaver' or break some other term of the agreement in which you have agreed that the rights might be forfeit. See the terms and conditions of the specific contractual documentation into which you entered as part of the EMI scheme.

Perhaps the agreement is that you have the option to buy the shares if they are to be disposed of in a sale of the company or under an IPO, or where the company is undergoing a sale of its assets, but not just because you feel like it during normal day to day business.

Is the company private or public? Assuming the former, why do you want to exercise your option now? It may well be the case that the value if you were to buy the shares and try to immediately dispose of them would be well below the recent fundraising valuation because there is no ready market for shares in a private company.

But the bottom line is we do not know what are the contractual terms of the option contract that you signed, nor do we know the business model or prospects of the company.

steampowered

You should have an 'option agreement' and a copy of the terms of the option scheme.

These will set out when you are entitled to exercise your options.

In many cases, the options will only be exercisable immediately prior to a sale of the company or an IPO.

In other cases, the options will be exercisable at any time. But this would mean you have to pay your £1 per share strike price, and it is unlikely that the company would be required to buy the shares off you.