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Watch For Noncompetes And Other Restrictive Covenants In Stock Grant Agreements

Bruce Brumberg
Your stock grant agreement can have a provision that will not only claw back your gains if you leave to work for a competitor but also restrain you from taking a job at that company. As this article explains, these types of provisions, called restrictive covenants, can lurk in grant agreements for stock options, restricted stock, and performance shares.

Your Stock Grants May Come With Strings Attached This is premium content

Bruce Brumberg
UPDATES! The days of pocketing stock grant gains, leaving the company, and moving to a direct competitor may be over. Your company may put noncompete forfeiture provisions in your equity awards.

Taking An Overseas Assignment: Stock Compensation For Internationally Mobile Employees (Part 1) This is premium content

Mark Miller
Podcast included! Taxation for internationally mobile employees can be extremely complex. Part 1 introduces the key cross-border topics you must know about equity compensation, including the sourcing and apportioning of income.

Taking An Overseas Assignment: Stock Compensation For Internationally Mobile Employees (Part 2) This is premium content

Mark Miller
Podcast included! Taxation for internationally mobile employees can be extremely complex. Part 2 looks at specific scenarios, withholding taxes, and tax equalization.

Strategies For Negotiating A Compensation Package In Down Markets This is premium content

Chris Murphy
A down market provides ideal circumstances for negotiating a larger stake of equity compensation as part of your pay package. With companies looking to conserve cash and find effective ways to recruit, retain, and motivate executives and key employees, your interest in this type of compensation may be well received. This article explores the possibilities you may want to consider if this opportunity arises.

Negotiating And Structuring Your Stock Compensation (Part 1): Key Documents This is premium content

Alisa J. Baker
Podcast included! You may find a gap between what you expect from your equity compensation and what you receive. Often the problem stems from the complexity of the related documents and rules. Learn about them, and understand why you must focus on conflicting or inconsistent provisions.

Negotiating And Structuring Your Stock Compensation (Part 2): Privately Held Companies This is premium content

Alisa J. Baker
Podcast included! Part 1 looked at the problems of conflicting or inconsistent provisions among different documents. Part 2 discusses which existing documents and rules nonfounder executives must consider when negotiating for equity compensation during the early (pre-public) stages of a company's development and growth.

What Are My Stock Options Worth? This is premium content

Richard Friedman
Your company just gave you a stock option grant, or your existing options are underwater. You wonder: "What are my stock options worth? Are they worth anything at all?" Learn about different valuation methods, including Black-Scholes.

Stock Grant Sizes In Pre-IPO Tech Companies

Johanna Schlegel
Particularly in high-tech startup companies, it is more important to know what percentage of the company a stock option grant represents than how many shares you get.

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How have the stock-market volatility and economic fluctuations of recent years changed stock grant practices?

Changes in executive compensation and equity pay practices stemming from the downturn of 2008 and 2009 were extensive. In general, during the recovery the focus in stock compensation has shifted...

UPDATES! How does a clawback work to take away gains from my equity compensation?

A clawback provision can appear in your employment agreement, stock grant agreement, or stock plan. If it is triggered, you must surrender to the company...

UPDATES! How common are clawback provisions? Any survey data about their use? This is premium content

Clawback forfeiture provisions usually do not appear in stock plans. Typically, they are included in stock grant agreements, which tend to be not publicly available. This makes data on clawbacks hard to find. However, a survey...

What is the tax impact of having a clawback in my grant? What if my company claws back the gains? This is premium content

The tax treatment that applies when you have a clawback provision or when a clawback is enforced is an evolving area that is gradually being clarified...

When I take an international assignment, will taxes on my stock compensation be equalized? This is premium content

At some companies, international assignments are often accompanied by what is commonly called an equalization package. To give you an incentive to accept the international assignment, the company agrees to...

Is it better to be granted nonqualified stock options (NQSOs) or incentive stock options (ISOs)?

First, you may be eligible to receive only NQSOs, so read the FAQs on the requirements of ISOs...

How are the dates of stock grants set, and when are grants made? This is premium content

Amid concerns about the backdating and springloading of stock options, companies have tightened their procedures for approving stock grants and their timing. After grants are properly approved, companies are now...

UPDATES! What guidelines do employers use to determine how many stock options or restricted shares to grant? This is premium content

Guidelines about grant sizes vary among industries and corporate peer groups. Most companies...

Can I have the exercise price of a new stock option grant lowered or backdated? What is the controversy over backdating? This is premium content

Backdating has become a dangerous practice for companies, and courts have imposed prison sentences on corporate executives found guilty of backdating violations. Previously, in some new-hire situations your company might have been more flexible. Now companies try...

How much are my options worth at grant? This is premium content

Stock options often cannot be exercised until they are vested, and then they are profitable only after...

How do I know whether I am being granted my fair share of stock options? Are grant guidelines available publicly so that I can compare my grant to others in my and different industries? This is premium content

Unless you are a senior executive of a public company who can compare grants at peer companies by looking at their proxy statements, or unless your company is willing to open its option records to you, you may never know whether you and your co-workers have been treated equally...

What should I do if I feel that I have been granted too few options and/or RSUs? This is premium content

If you are convinced that you have been treated unfairly, speak to the...

Do employers ever issue additional options or restricted stock to replace grants that were forfeited at a previous employer? This is premium content

If your skills are in great demand, employers may...

Can my employer give me a choice of stock options, restricted stock, or cash? This is premium content

Your company's flexibility depends on economic conditions, the stage of its development, trends in your industry, and the limitations in the company's stock plans. Any choice offered can depend on whether it is a negotiated grant at hire, an alternative to a cash bonus, or a new approach for your company's equity grants. Employee-choice programs are a nascent trend, with companies such as...

What does it mean when someone says that employee stock options have both face (or intrinsic) value and time value? How do these concepts apply to financial planning? This is premium content

The value of an option consists of two elements: time premium and intrinsic value. Intrinsic value is the difference...

I maxed out on Social Security tax earlier this year from stock option exercises and restricted stock vesting at my prior company. Then I changed jobs. Why did my new employer withhold Social Security tax from my wages?

The Social Security withholding by the prior employer does not...

Does service with a previous employer ever count toward vesting? This is premium content

Not usually. An exception would occur if your...

Can the terms of my severance accelerate vesting or give me a longer period to exercise my options? This is premium content

You can try for this in your severance agreement. Companies occasionally do this for all employees in special situations. But...

How common are noncompete provisions in stock grants? What activities can trigger a noncompete provision? This is premium content

Noncompetes are used by many companies...

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