Biotech Values

[jq1234]

>> Very likely it is sub-optimal to ever exercise early - the apparent gains come only if you ignore the extra cash you have to pony-up to avoid selling shares to cover taxes at the time of the exercise.

It really depends on one's tax situation. Your example is over simplified tax situation where withholding tax rate 40% federal/state at earlier exercise is the same as marginal tax rate of later exercise. They can be quite different. Withholding rate of 40% is a reasonable assumption, marginal tax rate is not for many high income people. For many of these executives, any gain from exercise via ordinary income and short term capital gain would fall into federal marginal tax rate of almost 40% while state of MA tax rate for short term capital gain is 12% compared to 5.2% for long term capital gain and ordinary income. This can change the equation decisively.