I went with an exercise and sell, although I decoupled the two by a week or two so I could get the best sell price I could manage.
Had I tried to hold to get favorable tax treatment, I would have watched the shares decline more than 80% over a few months, where they've not only never recovered, they've dropped another 10-15% and remained there.
No ER. Back to work!
Sucked writing a five figure check to CA and a six figure one to the IRS, but a dirty little smile kept creeping in.
When I got to the point of underwater options, and they were DEEPLY underwater at that point, was when I decided to take the separation package, get a years paid vacation, and even get repriced options if I went back to work.
A fine case of stock options being a negative influence to continue working...
I watched a couple of people try to exercise their options and hold them to lower the tax bite and get killed. Not sure which was harder to watch...those guys or the ones who crowed about having "every option the company ever gave them and never selling a share!" go from people with 10-15M on paper down to a million or two. Not that a couple of mil sucks, but to have been completely financially independent at that level would have probably been a little bit more pleasurable...
I remember one gal telling me that her 12M wasnt enough because she wanted to "continuously travel the world, stay in five star hotels and live extravagantly". Last time I saw her, she was still driving a 9 year old ford and living in a one bedroom apartment.