This calculator helps Netflix employees compare the value of purchasing Netflix stock versus stock options under the Supplemental Allocation plan. Enter your parameters below to visualize potential outcomes.
How Netflix Supplemental Stock Options Work: Employees can choose to forego a portion of their salary to purchase stock options. These options have an exercise price typically equal to the stock price at the time they are granted and last for 10 years.
This chart shows how the value of your stock and option investments change at different Netflix stock prices.
This chart shows the percentage return on your investment for both stock and options at different Netflix stock prices. For options, returns are calculated based on the intrinsic value (stock price minus exercise price) multiplied by the number of options owned.
Netflix offers a unique Supplemental Allocation plan where employees can choose to forego a portion of their salary to purchase stock options. The cost per option is typically less than the current stock price, allowing you to control more shares with the same investment.
These options have an exercise price typically equal to the stock price at the time they are granted and last for 10 years, even if you leave Netflix.
Options only have value when the stock price rises above the exercise price. Because you're paying for the options upfront, the stock price needs to rise enough to cover your cost per option to break even.
The stock price needs to rise beyond the break-even point before options outperform the alternative of buying stock directly.
Options are riskier than stock. If the stock price doesn't rise above the exercise price, your options will have zero value, and you'll lose your entire investment.
With stock, even if the price decreases, you still own something of value. Options require significant stock price appreciation to be worthwhile.
When you exercise options and sell the resulting shares, you'll generally pay capital gains tax on the profit. The tax treatment can be complex and may depend on your holding period and other factors.
This calculator provides a simplified after-tax analysis, but you should consult a tax professional for specific advice.
Disclaimer: This Netflix Supplemental Stock Option Plan Modeler is provided solely for educational and informational purposes. The calculations, projections, and analyses generated by this tool are intended to serve as general illustrations of potential investment outcomes and should not be relied upon for making investment decisions.
The information provided herein does not constitute legal, financial, tax, or investment advice. Prior to finalizing any investment or transaction, users should consult with qualified legal counsel, financial advisors, and other professional advisors to ensure compliance with applicable laws and regulations and to address specific circumstances.
The creators of this tool make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability of the tool or the information generated. Any reliance you place on such information is strictly at your own risk.
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