How Cake handles the $100K ISO limit
Stock options can be granted as Incentive Stock Options (ISOs) or Non-qualified Stock Options (NSOs). ISOs carry potential tax advantages for employees, but IRS rules cap how much can vest with ISO treatment at $100,000 per calendar year (based on fair market value at grant date). When a grant would push an employee over that limit, Cake automatically splits it into ISO and NSO portions. No manual action needed.
How the automatic split works
When you create a stock option grant, Cake checks whether it would cause the employee to exceed the $100K ISO vesting limit in any calendar year. If it does, Cake automatically designates the portion within the limit as ISO and the remainder as NSO. Both portions appear on the grant record without any input from you.
What happens next
The ISO and NSO split is reflected on the employee's grant record and visible in their portal.
US only feature