Non-qualified stock options (NQSOs)

Among various stock options available, NQSOs are relatively easy to understand, with more latitude to control the taxable impact, as compared to restricted stock units, by choosing when to exercise your options. That said, because proceeds are taxed as ordinary income at exercise, NQSOs may be less tax-efficient than ISOs. Describing availability, vesting schedules, tax treatments, maximum grants, 83(b) eligibility, termination agreements, and detailed cash flow considerations is beyond the scope of this glossary.