Stock options give teammates the right, within a designated timeframe, to buy a set number of their company’s shares at a preset price.

You can log right into Carta to access your equity options documents and information. If you

have trouble logging in, just let the People team know and we'll get your credentials updated.

1. You either have ISO or NSO options.

• ISO - Incentive Stock Options have more favorable tax treatment than NSO’s. When exercised, you don’t pay ordinary income tax on the gain but instead can pay capital gains tax. (A lower tax rate)
  • If an incentive stock option is exercised, and the shares are sold, the taxes paid are typically based on the difference between the price when the shares were granted and the fair market value at the time they are exercised. That tax is also deferred until such time the stocks are sold.
• NSO - Non-qualified Stock Options are a type of employee stock option where you pay ordinary income tax on the difference between the grant price and the fair market value at the time you exercise the option.

2. You can choose to exercise your vested ISO options within the 3 months after leaving Buffer. If you would like a longer period, we can draft an addendum that extends that period to 10 years after the options were granted. However this time extension will adjust your options from ISO to NSO, which introduces the difference in tax treatment at the time of exercise.

Please let us know if you’d like this additional time. Please also consult with your personal accountant or tax advisor for more information.

3. To exercise, you would pay the strike price (exercise price) of $x USD per share in order to convert the options to Common Stock. Your exercise price depends on when your options grant was issued. You can access this information in Carta.

Upon exercise, this is the point when the options transition to stock ownership in the company.

4. You can exercise your options right through Carta's platform or you can also reach out to the People or Finance team for help with facilitating that process.

Can I then cash out my shares?

In terms of selling your common stock once you've exercised your options, there isn't an immediate option for a stock sale but here are a few examples of how a sale could look.

1. The secondary market - There could be a buyer, or existing investor, currently interested. For example, we've had previous teammates find private buyers for their shares on the secondary market over the past couple of years. However, Buffer wants to make sure that any new investor coming on board is one that is aligned with the company so it's likely that the potential buyer would be an existing investor. Buffer doesn't get too involved in the secondary market so it's more of something you would independently navigate.

2. Employee Liquidity Programs - In the future, Buffer may decide to make a tender offer to buy (for example) $1,000,000 of shares of current employees and former employee stock. There are a few creative ways we could structure this.

Depending on the level of interest, we might need to cap the % amount that any particular individual can sell so that we can make sure more than a few people could participate in the offer ($1mm might not go too far). In a situation like this, early executives and founders could be limited to a lower %, such as 10%. With programs like this, it could be the case that it would take a couple of tender offers to fully cash out your shares.