Monday.com Employees Guide to Managing Stock Options, RSUs, and Equity Awards

MNDY's stock price has fallen more than 72% over the past 52 weeks, and the stock plummeted by 23% after the company's Q4 2025 earnings release. For engineers, product managers, and sales professionals sitting on unvested grants, this isn't just a line item in a brokerage account — it's a question of real money, real tax exposure, and decisions that are easy to get wrong under pressure. This guide cuts through the complexity and gives you a practical framework for managing stock options, RSUs, and S-8 plan awards through a volatile period.

Understanding what you actually hold

monday.com issues equity through a combination of vehicles. Stock options give employees the right to buy shares at a set price once vesting conditions are met, while RSUs promise delivery of shares upon meeting those vesting conditions. The distinction matters more than it seems. With options, you still have to pay the exercise price; with RSUs, no exercise is needed — when they vest, the shares are deposited directly.

Some options are fully vested and exercisable, while others vest quarterly over four years — a structure you'll see reflected in your own grant agreement. Exercise prices can vary dramatically within a single company: disclosed SEC filings for monday.com executives show exercise prices ranging from $9.38 to $211.78, a range that makes clear why the current share price environment doesn't affect all optionholders equally. If your exercise price is well above the current market price, your options are currently underwater. If it's well below, you hold real intrinsic value.

Form S-8 is the mechanism by which public companies register shares to be issued under an employee stock plan with the SEC. Companies typically file an S-8 soon after the board approves any new equity compensation plan and before employees receive their shares. As a plan participant, you're entitled to receive material information about the plan and its operations — so if you haven't reviewed the prospectus associated with your grant, that's the starting point.

How vesting works — and what happens when you leave

The conditions of your equity award — including exercise price and vesting period — are fixed at grant. The vesting period is typically set at three to four years of employment, with rights maturing in equal portions. Many grants follow a one-year cliff: nothing vests until the first anniversary of your grant date, after which vesting accelerates quarterly or monthly.

Employees often resign without considering the tax implications of their unexercised stock options. Under the Section 102 plan, employees have only 90 days after leaving their jobs to exercise vested options. If they fail to act within that window, they could lose their stock options entirely. This is one of the most costly and irreversible mistakes in equity management — and it's almost always avoidable with advance planning.

The Section 102 framework: Israel's tax advantage

Israel's equity compensation framework stands out due to its tax deferral of equity awards until sale, combined with a preferential 25% capital gains tax rate under Section 102. This framework reduces liquidity constraints and lowers tax burdens for employees, enhancing the attractiveness of equity compensation.

Section 102 of the Israel Income Tax Ordinance allows the employer to choose between a number of tax-favored routes for granting equity awards to employees and officers in Israel. An employer may choose for employee options to be taxed either as regular employment income or as capital gains income, with the first route being more favorable for the employer and the second more favorable for the employee.

Under the capital gains track — the route most likely to apply to your grants — the options are deposited with a trustee for a period of two years. The taxable event is deferred until the actual sale of the shares, and the gain will be taxed at a reduced rate of 25%. This is a significant structural advantage compared to the U.S. system.

The two-year rule: the most important number in your equity plan

RSUs granted under Section 102 can receive preferential capital gains tax treatment if they are held for at least two years from the grant date. Miss that mark, and the consequences are steep: selling RSUs or exercised options before the two-year mark from the grant date triggers Israeli taxation at ordinary income rates, which can be as high as 62% including Bituach Leumi. That's a massive tax hit compared to the 25-30% capital gains tax rate.

The practical implication: track your grant dates precisely, not your vesting dates. RSUs granted under Section 102 are taxed when sold, not at vesting. Holding for at least two years from the grant date may lower tax rates upon sale. If sold before two years, they are taxed as regular income at high marginal rates. If sold after the two-year holding period, some portion of the RSU will still be taxed as regular income, but any growth from the grant will be taxed at Israeli capital gains rates.

For U.S. citizens and dual-status employees

The cross-border dimension is where errors become expensive. The biggest challenge in equity compensation taxation for Americans in Israel stems from fundamental differences in the timing of taxable events between the two countries. While the IRS focuses on vesting and exercise dates, the Israeli tax system — especially under Section 102 — typically focuses on the date of sale of the shares.

The Section 102 plan is designed for Israeli tax advantages but does not automatically align with U.S. tax rules. U.S. citizens and tax residents may face taxation upon vesting or exercise, even if the shares aren't sold, leading to unexpected U.S. tax liabilities. All income and accompanying reports, including FBAR and FATCA, must be included in the annual tax return filed with the IRS.

Watch your trustee's withholding rate

One easily overlooked variable: your trustee's default tax withholding rate. Employees often assume the trustee automatically optimizes tax withholding. However, trustees typically withhold at a flat 50-62% rate, which may be much higher than you actually owe. If you've had a low-income year, or if the stock has declined significantly since your grant date, the trustee's default rate could result in a meaningful overpayment — money you can reclaim through proper tax reporting, but only if you know to ask.

Managing equity in a down market

In 2025, monday.com's revenue reached $1.23 billion, an increase of nearly 27% year over year, and earnings grew by 267%. The business fundamentals are not the problem. But MNDY's beta is 1.30, meaning monday.com's price volatility has historically exceeded the market average — and recent performance has exceeded even that. Since September 2025, the stock price dropped 60%.

For employees holding underwater options — where the exercise price exceeds today's market price — there is no immediate financial pressure to act. Options simply lose their intrinsic value; you are not obligated to exercise and take a loss. For RSU holders, the picture is different: RSUs have value as long as the stock price is above zero, but vesting into a declining stock means your ordinary income recognition (or Israeli taxable event at sale) occurs against a lower share price.

Key practical steps to manage equity during volatility:

• Locate your grant agreement and confirm your grant date, exercise price, vesting schedule, and expiration date.
• Calculate the two-year anniversary of each grant separately — this is the trigger date for preferential capital gains treatment, not the vesting date.
• If you are a U.S. citizen or green card holder, consult a cross-border tax professional before any exercise or sale event, particularly before ISOs expire.
• Request a withholding rate adjustment from your trustee if your effective tax rate is likely to be lower than the default flat rate.
• If you are considering leaving monday.com, model your option exercise window before submitting your notice — the 90-day post-departure clock begins the day you leave.

Relocation and plan eligibility

If you relocate in or out of Israel while holding RSUs or stock options, your tax situation can change dramatically. You might lose eligibility for the Section 102 plan benefits, and different tax jurisdictions may claim rights over your income. monday.com has teams in Tel Aviv, New York, San Francisco, Miami, Chicago, London, and Sydney, and cross-office transfers are common as the company scales. Any international move warrants a proactive conversation with a tax advisor before the transfer takes effect — not after.

New reporting requirements effective 2025

The Israel Tax Authority issued new regulations affecting all companies making equity awards to Israeli taxpayers. As of January 1, 2025, equity incentive plans intended to qualify under the capital gains track pursuant to Section 102 may only be submitted online. There is now an obligation to file quarterly and annual reports. The quarterly reports include information on awards made in the past quarter, such as the type of equity instrument, type of shares, date of grant, and exercise price. These changes are primarily a compliance burden on monday.com and its trustee, but employees should be aware that any unreported award could lose its Section 102 tax benefits — non-inclusion of a relevant award in a required report will result in disqualification of such award from the tax benefits of Section 102.

The stock price will recover or it won't — that part is outside anyone's control. What is within your control is understanding precisely what you hold, when the tax clock started, and what decisions preserve your options and reduce unnecessary tax leakage. The employees who come out of volatile periods in the best position are rarely the ones who timed the market; they're the ones who read the grant agreement before they needed to.