Introduction

The ISO $100K Limit Report provides you a centralized location to view and manage your employee Incentive Stock Option (ISO) grants and track their limits.

The $100K Limit rule restricts the value of exercisable ISOs that can be granted to an employee to be no more than $100,000 in a calendar year. If the total ISOs exceed $100K in value, they are no longer eligible for the preferred tax treatment and the IRS requires they be treated as non-qualified stock options (NQOs). For more information about this requirement, see our blog post on the ISO $100K Requirement.

Please note that this rule applies to all ISOs granted to an employee. This report looks at the aggregate value of all granted ISOs that are exercisable in a calendar year.

The ISO $100K Limit Report

Accessing the report

Users must have Full Equity Access to view this report.

The ISO $100K Limit Report is found in the Equity section of the platform. From the Company Workspace click on MORE> ISO $100K Limit Report.

The report is also found in the left-side panel under Equity> Reports.

Report overview

The report will show a summary and detailed list of all employees that have been granted an ISO.

Employees who are approaching or have exceeded the limit for the current year are weighted at the top of the list. You can click on the Employee or Current Year column headers to change how the list is sorted. There is also a search box you can use to find specific employees.

There are two statuses that can be applied to the Current Year, Future Years, and Previous Years columns.

Reached: If a grantee has more than $100,000 in exercisable ISOs in a given calendar year, the report will show Reached with the applicable year(s).
Approaching: This status provides a warning when an employee is getting close to exceeding the threshold. By default, the threshold is set to trigger when the available value of ISOs that can be granted drops below $10,000. The threshold can be changed in the report options.
For employees that are not close to approaching or have not exceeded their limit, there will be no status shown; Instead, it will be represented by a dash (-).

To filter the employee list, click on Options. You can select to show all holders, only those reaching their limit, or those that have met their limit. You can also adjust the threshold dollar amount used. By default, the threshold is $10,000 but you can select $5,000, $25,000, or $50,000.

Click Export Report to download the report as an .xlsx file. The export will list all employees and dollar amounts broken out by year. Amounts reaching the limit are highlighted in yellow, and any amounts that have reached will be highlighted in red.

Grant details

You can see a more detailed view of an employee's holdings from within the report. Either click on the employee's name, or click on the three-bar menu and select View details.

This modal shows the total number of ISO shares granted, which includes any pending grants. If the employee has any promised grants, those will not be included in the totals. The table view will show the status of reaching or approaching the $100K limit, the value of ISOs available to grant, and aggregate value of ISOs issues, all broken out by each applicable vesting calendar year.

Clicking on View all grants will direct you to the employee's holding page. Click on Export Report to download a detailed spreadsheet of all ISO grants for the employee. If any grants have milestone or variable vesting schedules, the maximum possible value of the grant is included in each year's calculation and will show on the table as repeated entries.

FAQs

What happens with grants with early exercise? The 100k rule is based on when a grant is exercisable. Since an early exercise grant can be immediately exercised, the entire value of the grant would be applied to the $100k limit in the year it is issued, even if the grant has a vesting schedule.

Are equity promises counted towards the limit? No. Equity promises are mentioned in the report for context but are not counted towards the limit.

Are pending grants counted towards the limit? Yes. Pending grants are counted towards the ISO total and limit.

What happens to cancelled grants? If an option is disqualified from ISO treatment by a modification or cancellation before the year in which it would have become exercisable, then it is not considered when calculating the $100k limit. However, if the modification or cancellation happens any time in the year the option would have become exercisable, the option is counted for the purposes of the limit for that year.

Screenshots are for illustrative purposes only.

Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.

Fidelity Private Shares LLC provides cap table management and other administrative services to private companies and their equity compensation plans.

Fidelity Private Shares LLC

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