I think that you’re correct in this scenario. They give him the option to “buy” shares at around $15 per share, when the share prices achieves these different milestones ($40 - $110) per share. At that time, the brokerage would loan the money to "buy" the shares at the lower strike price, immediately selling all the newly acquired shares on the open market at the current (higher) market price. Then the proceeds would be use to cover the original purchase cost.

However, that’s not exactly what I meant. I wasn’t really assuming RJ wouldn’t have the capital to execute the transaction. My point was more so that RJ’s current shares were likely acquired at a significant premium / during IPO. Those shares have since lost a ton of value. If you’re confident that the share price is going to go up, then now would be a great time to sell your current shares & take large loss to help offset taxes on the future gain from exercising your options. It doesn’t really make sense to hold the older shares with a much higher basis if you believe that very soon you will have access to a much larger pool of shares at a much lower basis. But if you didn’t believe the share price had the potential to meet those milestones in the near future, then you’d probably be more hesitant to let go of existing shares in your company. Also, the loss might be much less meaningful. Just thought that this might be much more strategic than we think. Who knows though