Options.... RDNOA, RDNO, page-289

When a company is taken over, the fate of stock options depends on various factors. Let’s break it down:

1. Call Options:

   • A call option grants the holder the right to purchase shares of stock at a pre-determined price before it expires.
   • If the acquiring company offers a higher price than the call option’s strike price, the holder can profit from the difference between the strike and takeover price.
   • If the strike price of the call option is higher than the market or takeover price, the option will expire worthless.
   • Employees with vested stock options of the target company are typically compensated by the acquirer¹.

2. Unvested Options:

   • Unvested options may have their vesting accelerated, allowing option holders to participate in the sale.
   • Alternatively, the acquiring company’s board may decide to buy back or cancel unvested options at their fair market value².

3. Vested Options:

   • The acquiring company could assume your vested stock options or substitute them.
   • You might still need to wait to buy shares or receive cash, but you can retain your vested shares³.

Remember that specific details can vary based on the terms of the acquisition and the company’s policies. Always consult official documentation or seek professional advice for accurate information.