I've recently been affected by a downsizing and will have to exercise a large block of options. I'd like
to get any suggestions on how to minimize the tax bite.
Specifically, I'm looking for ways to shelter if possible the proceeds from the options sale.

It depends on the type of options they are. If they are ISO or incentive stock options you may purchase the shares, hold them a year and them sell them at the better capital gains rate. However, if they work like my husbands buying that many shares can be very daunting. If they are Nonstatatory options then your options are limited, the taxes will be withheld when exersized and they will be treated as ordinary income.

If you get the cash right away or they are nonstatatory options then you need to look at some of the general tax savings issues, like prepaying tax deductible expense, donating part of the proceeds to charity, etc.

Hope this helps.