Stock Option Grants

11 11 2012

We receive several questions from our clients about stock option grants and option exercises and what the various steps in the processes are. We would like to highlight the three most commonly asked questions as well as provide some helpful hints when granting stock options.

Q: How do I know how many options can be granted?

A: The number of options available to be granted will depend on the type of stock option plan that your company has. As a publicly traded company in Canada, you will have either a 10% rolling plan or a fixed number stock option.

Q: Do I need to issue a press release when options are granted?

A: Yes. A press release is required to be issued following approval of the option grant by the board of directors. You will need to refer to your applicable stock exchange manual for the details which need to be included in the release.

Q: When do I need to report on SEDI:

A: When options are granted to insiders of the company they are required to file the grant within 5 calendar days of the grant. The report can be filed one of two ways:

  • Each insider can file their own report within 5 calendar days of the grant, or
  • The Company can file an Option Grant Report within 5 calendar days of the grant and then each insider will need to file their personal grant report on the earlier of when the insider exercise the options (at which time a report must be filed within the normal 5 days showing both the grant and the exercise) or by March 31 following the year in which the securities were acquired.

Helpful hint 1: Don’t forget to diarize to follow up with the optionees prior to option expiration date reminding them of their current holdings and how they can be exercised.

Helpful hint 2: For insiders who are granted options and who still hold options on the expiry date, an insider report showing the expiration needs to be filed within 5 calendars of the expiration date.



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