Exercising Stock options via ACH

Exercising options into shares on Carta via ACH is available to US-based optionholders of US private companies exercising ISOs, NSOs, or ISO/NSO split option grants.

NOTE: Only one ACH exercise can be pending on an option grant award at a time. A new ACH exercise request can be initiated on that option grant once it has completed. 

 
CLICK THE SECTION HEADER TO SKIP BELOW:

• Setting up an exercise request
• Completing the exercise request form

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WHAT DO I NEED TO DO TO SUBMIT AN EXERCISE REQUEST?

1. Carta recommends that you connect your bank account instantly via Plaid in the Account > Payment information page. However, if you need to connect your bank account manually or cannot find your bank in Plaid’s list, follow these steps to connect your bank account prior to exercising.
   
    
2. On the Portfolio page, click the issuing company’s name or image to see holdings and other details related to the company.
   NOTE: Your portfolio view may vary from the image below based on your specific holdings and account type.
   
    
3. Click into the Holdings tab.
   
    
4. Scroll down to the Exercise your options section and click Exercise to begin an exercise request.
   NOTE: The Exercise button is only accessible if you have options available to exercise.
   
    

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HOW DO I FILL OUT THE EXERCISE REQUEST FORM?

Prior to proceeding with your exercise request, it is recommended that you explore Carta’s Equity 101 course and consult your personal financial advisor or tax professional to make sure exercising is right for you.
 

1. Confirm that your residence information is up to date and accurate. To continue, click Confirm address and proceed. 
   NOTE: If the issuing company does not have your legal residence on file, you will need to enter your address in the fields to continue. If the issuing company does have your address on file, the address will be pre-populated and you can contact the issuer by clicking contact your company administrator if it needs to be updated.
   
    
2. Select the option grant you would like to exercise from the list. Any option grants that are expired, canceled, or have a pending exercise will not be available to be exercised. Click Next.
   
    
3. Review the quantity of options that are available for you to exercise and enter your desired amount into the Amount to exercise box. The total pre-tax cost will automatically be calculated below. When ready, click Next.
   
    
4. Review today’s taxes: Based on the grant type (ISO or NSO), you may or may not have taxes obligations due at exercise.
   1. If you are exercising ISOs, you may not have taxes owed at the time of exercise, but you may be subject to AMT, which will be estimated in the next step.
      
       
   2. If you are exercising NSOs and were a U.S. employee of the issuing company during the time frame, you are likely to be subject to tax withholdings. Based on your address, the platform will assist in calculating the tax withholdings based on the maximum percentage for each area. These can be adjusted by the Company’s exercise approver before they approve the exercise.
      
       
5. Review end of year taxes. Based on the grant type (ISO or NSO), you may or may not have tax obligations due at the end of the year for the exercise.
   1. If you are exercising ISOs, the platform may estimate AMT based on the option spread from current fair market value to the exercise price.
      
       
   2. If you are exercising NSOs, you are likely to not owe additional taxes upon exercise, unless you sell your shares at a later time.
      
       
6. Review the details of the exercise, including the cost to exercise with taxes owed. Check off the boxes to agree to the withdrawal of funds, as well as the terms and conditions. Click Sign and submit exercise request to proceed to the signature page.
   NOTE: To cancel your electronic exercise after submission, you must reach out to the issuing company.
    
   1. If you are exercising ISOs, you will see a review page similar to the one below.
      
       
   2. If you are exercising NSOs, a review page similar to the following image will display.
      
       
7. If your bank account is connected via Plaid, Carta will check to ensure there are sufficient funds to complete the exercise. If the selected bank account has insufficient funds, a warning will appear above your payment method. Carta strongly recommends ensuring funds are available before submitting your exercise request. 
   
    
   1. You can continue to submit the exercise, but if Carta fails to withdraw the funds due to an insufficient balance, the exercise will be canceled. To proceed despite the warning, click Yes, sign and submit exercise request.
      
       
8. Check off the boxes for the documents attached to your option grant to indicate receipt and understanding, and type your name to electronically sign. When you are ready, click Submit exercise request.
   
    
9. Congratulations! You have submitted your exercise to the company’s exercise approver, who can adjust any tax withholdings (if NSO exercise) or review any details before approving. The exercise funds will be withdrawn from your bank account after the company’s exercise approver approves the electronic exercise. Learn more about the funds transfer workflow.
   
    

If you are early exercising, you will be able to download a copy of your pre-filled 83(b) election to sign and file with the IRS. Learn more about 83(b) elections for early exercised option grants.