You may want to consult a tax accountant given the large sums but IIRC from the days I used to have stock options as an employee, when you exercised the option, you paid ordinary income tax on the difference between the option strike price and the current value of the stock. If, after exercising the options, you decide to hang on the shares, you would need to pay tax as usual on any gains ie short term gains if < a year vs long term capital gains if > 1 year.