How to exercise an option grant as an administrator

An overview of how to record exercises of vested options on Capdesk

There are three ways in which you can register an exercise transaction on Capdesk:

1. Register offline exercise - you can use this feature when the signing process has taken place or will be signed outside Capdesk

2. Create exercise window - you can use this feature to allow your stakeholder to exercise any vested options up to date (please note, this will not cancel the unvested options)

3. Terminate Grant (Exercise) - you can use this feature to create an exercise window and terminate a grant once the exercise window is completed

1. Register offline exercise

To register an offline exercise, go to Options (left-side menu) - then Grants tab - click on the three dotted action button relevant to the grant you wish to exercise '...' - Register Offline Exercise.

You will then need to input the relevant details for the exercise such as:

Exercise Date - the date the exercise took place

Specify the number of options that have been exercised - you can choose from the three given options:

• Exercise vested options
• Exercise all outstanding options including any options yet to vest
• Specify a number of options to exercise

Advanced - choose a funding round and select if this is employment related

Documents - add any relevant documents such as an Exercise notice or S431

Once completed, click Save Draft (to review the exercise and publish at a later date) or Publish Exercise and Notify (to publish straight away).

A new transaction will be created on Transactions page (under the Shares tab) to illustrate the exercise and reflect the new shareholdings.

2. Create exercise window

Before creating an exercise window you will need to:

a) Add the relevant exercise notice template on Capdesk. Please note your account will also need to be live to create an exercise window on Capdesk.

b) Select the default signatory (the person who will publish the exercises on behalf of the company) 

To create an exercise window go to Options (left-side menu) - then Grants tab - click on the three dotted action button relevant to the grant you wish to exercise '...' - Create Exercise Window

On the new page, you will need to input the relevant dates for the exercise window:

Exercise Window Start Date - please note this is a compulsory field

Exercise Window End Date - you can choose not to add an end date at this time

Exercise document set - if you have got multiple exercise document sets under the same option plan, you can select the relevant one for the grantholder here. 

Your message for the grantholder - this is where you can add payment information or any relevant information to pass on to the grantholder

Once added, select Save.

You will then be able to see the exercise window created by clicking on View (next to the relevant grant) and scroll down on the pop up side panel to Online Exercises and Terminations.

The optionholder will now look to complete the exercise order and once complete, the exercise will need to be published.

3. Terminate Grant (Exercise)

a) Add the relevant exercise notice template on Capdesk. Please note your account will also need to be live to create an exercise window on Capdesk.

b) Select the default signatory (the person who will publish the exercises on behalf of the company) 

To terminate a grant, go to 'Options' (under Equity Awards) -> Grants -> search for the grant that you would like to terminate -> click the action button (3 dots) -> 'Terminate Grant (Exercise)'.

You will then need to input the relevant details for the exercise such as:

Exercise Window Start Date - the date when the exercise window starts

Choose the number of options to be cancelled: Cancel all unvested or Cancel unvested and more

Exercise Window End Date - you can choose from the 2 given options or specify an exact date

Cancel all vested grant securities once the grant termination is completed. - If this box is ticked, the grantholder will lose all their vested grant securities that they did not exercise after the termination is completed. You may want to tick this if you consider the grantholder a “bad leaver”. If this box is blank, the grantholder will retain vested grant securities that they did not exercise after the termination. You may want to leave this blank if you consider the grantholder a “good leaver”.

Exercise document set - if you have got multiple exercise document sets under the same option plan, you can select the relevant one for the grantholder here. 

Your message for the grantholder - this is where you can add payment information or any relevant information to pass on to the grantholder

Once done, click on Start Grant Termination.

The optionholder will now look to complete the exercise order and once complete, the exercise will need to be published.

How to publish an exercise

To follow the status of the exercise, go to 'Options' (under Equity Awards) -> Online Exercises. This page will give a summary of the grants undertaking this process and how it is progressing (if the optionholder has paid for the exercise and who is to sign the exercise notice - see Status column). 

There are three statuses the grant can have:

1. Stakeholder signing - This implies that the grantholder needs to state how much equity to exercise and to sign the relevant documentation i.e. Exercise notice.
2. Issuer publishing - The grantholder has completed the above and it is now for the company signatory to publish the relevant documentation. Here is an article on how to configure a signatory.
3. Published - All steps are complete and the exercise has been completed. The optionholder will be able to find all documentation and details of the exercise in their portfolio and the exercise will also be reflected in the company cap table.

Before proceeding, please be aware that once an online exercise is published, this transaction cannot be amended or revoked in the platform. It is imperative that you ensure the transaction details and signed documents are correct before publishing.

When you have received the funds for the exercise, find the grant -> click the action button (3 dots) of the grant -> 'Mark as paid'. It is mandatory that the payment date is entered in order to publish the exercise.

Once all outstanding signatures have been completed for the exercise notice, and the transaction has been marked as paid, you can publish the exercise by clicking the action button (3 dots) of the grant and selecting 'Publish'.

Please note that the exercise date will be taken as either the date of the last signature on the document or the payment date, depending on which one is the latest.