I am assuming you need to exercise the options and then donate the stock, or the proceeds from the sale of the stock.
If your options are (USA law) NQSO, non-qualified stock options, then
1) there is essnetially no difference between donating cash and donating stock/proceeds
2) you are most likely making an expensive mistake in not holding the options till much closer to their expiration date.
If they are qualified stock options, then 2) would still apply, but I do not know about QSOs and their tax/charity treatments.
Options have a “time value” and if your options were tradable, you could sell them for significantly more than the value you get from exercising them and selling or keeping the stock. That options granted to employees are NOT tradable means the only way to realize the “time value” is to keep the options until close to their expectation date.
That your personal utility for additional dollars is lower as you get more is probably irrelevant or irrational in the case where you are donating to charities. Pretty clearly there are plenty of charities that have utility functions for recieved dollars that are nearly completely linear over the range of values you are talking about. It would seem, then, that you should have something pretty close to a linear utility associated with the dollars you give to these charities.
I’m sorry, I wasn’t clear. I’m not thinking about selling the options prematurely to turn them into donateable money sooner. I’m considering shifting from my current “all salary is mine, all options are to charity (eventually)” to “some salary is mine, some is to charity, all options are mine” (or somewhere in between).
I am assuming you need to exercise the options and then donate the stock, or the proceeds from the sale of the stock.
If your options are (USA law) NQSO, non-qualified stock options, then 1) there is essnetially no difference between donating cash and donating stock/proceeds 2) you are most likely making an expensive mistake in not holding the options till much closer to their expiration date.
If they are qualified stock options, then 2) would still apply, but I do not know about QSOs and their tax/charity treatments.
Options have a “time value” and if your options were tradable, you could sell them for significantly more than the value you get from exercising them and selling or keeping the stock. That options granted to employees are NOT tradable means the only way to realize the “time value” is to keep the options until close to their expectation date.
That your personal utility for additional dollars is lower as you get more is probably irrelevant or irrational in the case where you are donating to charities. Pretty clearly there are plenty of charities that have utility functions for recieved dollars that are nearly completely linear over the range of values you are talking about. It would seem, then, that you should have something pretty close to a linear utility associated with the dollars you give to these charities.
Cheers, Mike
I’m sorry, I wasn’t clear. I’m not thinking about selling the options prematurely to turn them into donateable money sooner. I’m considering shifting from my current “all salary is mine, all options are to charity (eventually)” to “some salary is mine, some is to charity, all options are mine” (or somewhere in between).
See also this.