Richard Friedman
UPDATED! Understand financial planning for restricted stock and RSUs. Part 1 discusses the growing popularity of these grants, their special features, and the related tax planning.
Richard Friedman
Careful planning can help you maximize the value of restricted stock and RSUs by preparing you for decisions you must make. Part 2 covers complex issues in financial, estate, and retirement planning.
Alan B. Ungar
In a growing trend, your company may let you choose between stock options and restricted stock. Which is better for you? Learn techniques to analyze your financial situation and goals so that you can make the right choice.
Alan B. Ungar
As noted in Part 1, many companies are developing employee-choice programs that allow you to choose between stock options and restricted stock. Part 2 provides a method of analysis to help your decision-making.
Tom Davison
Vesting is another crucial time for making decisions about your restricted stock. Decisions include what tax-withholding method to use, whether you should hold or sell the stock, and what account to keep the shares or cash in after vesting.
Bruce Brumberg
myStockOptions.com
This PowerPoint presentation (in PDF) provides tips and suggestions from myStockOptions.com on explaining restricted stock and RSUs to employees and executives. (Please allow up to a minute for the PDF to fully load in your browser.)
Don Durfee
CFO Magazine
Companies may now consider alternatives to grants of time-vested restricted stock, such as performance shares and units. Tying stock awards to performance goals raises new complexities beyond just pleasing shareholders.
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The outcome depends on how well your company's stock price does in the years after the grant date and on the ratio of stock options to restricted shares, among other factors. To calculate whether the appreciation of stock option gains equals or exceeds restricted stock gains, you need to...
Restricted stock has full value to you at vesting, regardless of whether the stock price has dropped after the grant date. This leads companies to grant fewer shares of restricted stock (or restricted stock units) than stock options. The ratio used to give a restricted stock grant an equivalent "value" to that of existing stock option grants depends on different factors. Common ratios are...
Expensing became mandatory for calendar-year companies at the beginning of 2006. This does not change the tax treatment of your stock option grant. However, because companies take an earnings charge for the "fair value" of stock option grants on their income statements, companies may change their grant practices by reducing the number of stock options, moving to grant more...
A summary of data in surveys from 10 major consulting and research firms shows that...
Yes. For restricted stock whose vesting is based on the length of time you are employed...
With variable grant guidelines your company determines grant size according to...
Restricted stock shares are issued up front at grant, but you do not own them outright and cannot sell or transfer the shares until the restrictions lapse. With standard restricted stock units the situation is similar, except that...
These long-term incentive plans have performance targets that, when reached by the end of the measurement period (e.g., a three-year period), trigger vesting or payout according to the structure of the plan. The payout can be all or nothing of the target payout (100% or 0%), or the grant size can be based on a sliding scale that gives you less than or even more than the target grant size. Performance share grants with payouts that can exceed the target (e.g., 150%) for exceptional performance can provide...
Consulting firms have studied the use of stock compensation in both developed and emerging economies. Stock options remain popular, but interest is growing in restricted stock/RSUs and performance shares. Among surveyed countries...
Stock appreciation rights entitle you to stock (or sometimes cash) that equals the amount...
If your skills are in great demand, employers may...
With a few exceptions, the grant, vesting, or exercise of stock options, or the vesting of restricted stock, should not affect your other retirement-plan benefits. One notable exception...
There is some. In its
2007 Domestic Stock Plan Design & Administration Survey, the National Association of Stock Plan Professionals found that 60% of the responding companies have...
This depends on the terms of your company's plan document and your grant agreement as well as on the reason for the...
Companies either include maternity in their short-term disability policy (and suspend vesting, regardless of the reason for the short-term leave) or...
Under some stock plans, if you are temporarily disabled and your employment is not terminated, you...
Most likely, retirement will cause your company to do neither. Retirement is a type of termination of employment under your stock plan. Only a small minority of companies either let the stock options continue to...
Some companies let the standard time-based vesting schedule accelerate if...
Successful completion of venture financing is a typical performance goal for a startup company. A public company might...
Provisions vary according to the terms of your grant and stock plan. These provisions can be triggered when...
Most stock plans do not permit this for restricted stock or stock options. Lenders would also not accept restricted stock as collateral because...
Not unilaterally. Although no specific law exists on this question, courts have examined this situation and provided some guidance...
These provisions are not as common with restricted stock as they are with stock options...
Stock ownership guidelines specify how much company stock you must own in total or as a multiple of salary. Most companies count in the calculation the...
In theory, when a company pays a dividend, particularly a large special dividend, its stock value declines by...
Dividends and the shareholder voting rights that go with restricted stock do not...
Not until the restricted stock vests. Then the stock is...
You cannot be charged just for the vesting of restricted stock, as no sale of securities occurs. However...
Both Rule 10b5-1 and the broader use of restricted stock and RSUs are new, so practices and procedures are evolving. Companies are considering the widespread use of Rule 10b5-1 plans for this...
If you are a "reporting person" under Section 16(a) of the Securities Exchange Act of 1934 (i.e., you file Forms 3, 4, or 5), then you are also subject to the short-swing profits liability provisions of...
Within two business days of the grant, you file Form 4 electronically under the SEC's Section 16 rules. At vesting, depending on the withholding method...
Yes. Assuming the company's grant met the rules for exemption under Section 16, the grant and vesting are not matchable...
Yes, but the arrangement must be carefully structured not to be considered a stock option or nonrecourse loan...
In a quest to start your one-year capital gains holding period and minimize the amount of ordinary income associated with an award or grant, you may...
First a court must decide (under the relevant state's laws) whether the property subject to division includes...
You should read the terms of your stock plan and grant agreement. If the plan allows...
Not necessarily. If an acquirer is using its stock to pay for shares of your company, then the purchase will be denominated in stock according to one of several methods...
In many plans unvested options accelerate in some way...
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