Pulley allows employees to exercise their options via ACH. Companies can enable electronic exercises by connecting their bank accounts to receive payments. Note: you must be on the Growth Plan to access this feature.
Watch the following video to learn how the process works.
The steps to exercise are as follows:
1. Add an exercise approver and connect a company bank account - Choose a company admin to review option exercises and connect your company's bank account through Stripe. All employee exercises will be deposited directly in the connected account. Connect your company's bank account Exercise Requests underneath Tools.
The payment flow and SMS verification is handled by Plaid and Stripe.
1. (a) International Exercises - Pulley now supports international exercises! To enable international exercises you will need to connect your Wise account in the same page:
2. If required, upload a form of notice of exercise. This is a legal formality required by certain lawyers and equity plans. Request the form from your lawyer and upload to Pulley.
Your employees will be able to e-sign the exercise form(s), and Pulley will populate the appropriate values on the variables you insert into the document. Please see this article for detailed instructions on how to set up your documents for e-signing during a Pulley exercise.
3. Review exercise requests - Employees initiate option exercise requests through their account. Admins will receive an email after a request is initiated. Admins can review all open and closed requests by clicking "Exercise Requests" on the left navigation.
3. Approve exercise amount and taxes - Admins can modify the exercise cost and taxes. The updated amount is returned to the employee who submitted the request.
Your company is responsible for accurately calculating taxes associated with exercises. We recommend consulting a tax professional or your payroll provider to properly manage exercise taxes. Typically, companies do not need to withhold taxes at the time of exercise for ISO grants. NSO grants are taxed on the difference between the FMV and the strike price at the time of the exercise. Pulley does not remit the taxes collected to the IRS. Companies will need to work with their payroll provider and update box 12 of the W2 for all employees who exercised NSO grants.
4. Exercise Complete! Once the employee's payment hits the company bank account, the exercise will be complete and your employees will receive a new certificate for their shares.
For further reading on exercising options, see our article on the tax implications of exercising ISO and NSO options.
This article is provided only for informational purposes. Pulley does not provide tax, accounting, or legal advice. We recommend consulting with the company's tax and legal advisor regarding the implications of exercising options.
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