How do I compare the cost of non-recourse financing vs the shares I’d give up in a cashless exercise?

If you are choosing between a cashless exercise and non-recourse financing, the key question is: Which option leaves you better off after taxes, fees, and potential future upside?

This is not just about cost today. We believe it is about:

• Shares you give up now
• Value those shares could have later
• Financing costs you may pay at exit

You are comparing two different types of cost:

1. Cashless exercise: you pay by giving up shares today
2. Non-recourse financing: you keep shares but pay later through financing terms

At Secfi, we help employees navigate this exact decision by modeling different scenarios via our AI equity assistant Maeve, estimating taxes, and, where relevant, providing non-recourse financing so you can evaluate both the analysis and the execution side in one place.

What is the core difference between these two options?

1. Cashless exercise (sell-to-cover)

• Exercise options and sell shares immediately
• Use proceeds to cover strike price and taxes
• Keep the remaining shares

Result: You can help reduce risk but give up ownership early. You also pay ordinary income rates because you exercised and immediately sold them.

2. Non-recourse financing

• Exercise without selling shares
• Keep full ownership upfront
• Repay financing only at a liquidity event

Result: You can help preserve upside but take on a future obligation tied to your shares.

Cashless exercise vs non-recourse financing: comparison table