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Cashless option exercise plumbing — why the sale is mechanically generated, not discretionary A vested 2017-grant employee stock option (strike $127.98) flows through a broker that simultaneously exercises with the company (Form 4 code M) and sells all resulting shares into the open market at $368.30 (Form 4 code S). The broker remits net cash to the insider. Toggle between headline view (gross sale ~$2.9M on the S line) and economic realization view (intrinsic ~$1.9M). Vested 2017-grant option strike $127.98 · earned comp Broker cashless exercise-and-sell Company treasury strike cost · code M Open market sold @ $368.30 · code S Tax withhold slice of gross Insider receives net cash Form 4 filing M line · exercise strike cost S line · sale (gross) ~$2.9M filed together same day 1 2 3 5 7 Cash flow waterfall: gross sale to net cash to insider Gross sale S line ~$2.9M Strike cost to company ~$1.0M Taxes withhold ~$0.3M Net cash to insider ~$1.6M intrinsic value ~$1.9M (option's economic realization) headline overstatement: gross $2.9M vs intrinsic ~$1.9M
gross sale (S line) subtract: strike cost + taxes net cash to insider intrinsic value (realization)

The S-line sale is mechanically generated by the M-line exercise (the insider never held these shares before), so it is realization of previously-earned compensation, not a discretionary directional bet. The Form 4 reports the gross sale (~$2.9M) on the S line, which the headline captures; the insider's net economic realization is the option's intrinsic value (~$1.9M). 10b5-1 plan status unconfirmed; M+S pairing inferred from the cashless-exercise description.