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Basics

Learn core knowledge about stock grants. Browse an overview of this section below, or explore the subtopics to the left. This section covers basic concepts that apply not just to stock options but also to restricted stock and restricted stock units. See also the Tax Center for special sections just on the tax basics of various equity grants.

Test Your KnowledgeTest and improve your knowledge with our Basics Of Stock Grants quiz and its study guide in the answer key.

Want to know more? Listen to our podcasts on the basics of stock options, restricted stock, and ESPPs.

  Articles   FAQs  

Restricted Stock 101: Five Essentials Of Restricted Stock & RSUs This is premium content

Matt Simon
While restricted stock and RSUs are relatively straightforward, they have technical aspects you must understand to make the most of them. Learn the essential facts of restricted stock and RSUs, including basic concepts, vesting schedules, and tax treatment.

Six ESPP Essentials (Part 1): Enrollment, Plan Type, Purchase Timing This is premium content

Matt Simon
An employee stock purchase plan can be a great benefit, but the rules and taxation are tricky. This two-part article presents six topics you must be familiar with to get the most from your ESPP. Part 1 covers enrollment, plan types, and offering/purchase periods.

Restricted Stock Units Made Simple (Part 1): Understanding The Core Concepts

Matt Simon
Restricted stock units (RSUs) have become the most popular alternative to stock options. While RSUs share many of the same issues as restricted stock, there are differences, and it is important to understand the basics of RSUs in their own right.

How To Avoid The Most Common Stock Option Mistakes (Part 1)

Beth Walker
Avoid the mistakes others made with options during past ups and downs in the stock markets. Situations where common errors tend to arise can be classed into nine categories, including option-term expiration, job termination, corporate mergers, financial planning, and various life events.

How To Avoid The Most Common Stock Option Mistakes (Part 2) This is premium content

Beth Walker
Avoid the mistakes others made during prior ups and downs in the stock markets. Common errors arise in nine different situations, including job termination, mergers, financial planning, term expiration, and various life events.

A Holistic Approach To Managing Equity Compensation This is premium content

Geoffrey M. Zimmerman
Planning for equity compensation begins with identifying the role stock grants will play in your life, whether for retirement, college funding, or other goals. This article offers points to consider for three different types of investors.

How Does Your Company's Stock Plan Compare? (Part 1)

Kate Victory
UPDATES! How typical are your equity awards? Stock plan surveys let you compare the terms of your grants with the common practices of many companies. Part 1 focuses on types of equity award, reasons for making grants, vesting schedules, and option exercises.

How Does Your Company's Stock Plan Compare? (Part 2) This is premium content

Kate Victory
UPDATES! How typical are your grants of stock options or restricted stock/RSUs? Stock plan surveys let you compare the terms of your grants with the common practices of many companies. Part 2 focuses on grant guidelines, option expiration, job termination, and corporate changes of control.

Stomach Volatility In Your Company's Stock Without Losing Your Mind

Joanna Glasner and Bruce Brumberg
Don't be discouraged by stock market volatility and underwater stock options. As the experts note, stock grants are tools for building wealth in the long term.

Stockbrokers' Secrets: Strategy For Volatile Markets

W.E.B. Bantling
Market volatility and declines rattle even the most experienced holders of stock compensation (and their advisors). Here are 10 topics I find myself discussing over and over again with my best clients.

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What is a stock option?

Generally, a stock option is a right that a corporation grants...

What is restricted stock? Does it differ from restricted securities?

Don't confuse restricted securities and restricted stock. They are very different...

What advantages do restricted stock and RSUs have over stock options? How do the two grant types compare?

Restricted stock always has some value to you even when the stock price drops below the price on the date of grant...

Why do companies shift from granting stock options to granting restricted stock units, and then sometimes back again to granting at least some stock options?

Surveys indicate that many companies use a variety of grants, including both stock options and restricted stock units (RSUs) in tandem. There are many possible reasons why a company might switch from options to RSUs...

What is an employee stock purchase plan?

An employee stock purchase plan (ESPP) is a type of stock plan that permits employees to use after-tax payroll deductions to acquire shares of their company's stock. Plans can have...

How does an ESPP differ from a stock option plan?

Employee stock purchase plans tend to be viewed as a benefit while stock options are a form of compensation. From an employee perspective, there are some differences in operations, eligibility, and design...

How is my stock grant's exercise price set? This is premium content

The full board of directors, the compensation committee, or an executive with expressly delegated authority...

How is fair market value (FMV) determined for setting my exercise price? What are common company practices? This is premium content

In most cases, your exercise price for stock options is...

What is a vesting schedule?

A vesting schedule dictates when you may exercise your stock options or when the forfeiture restrictions lapse on restricted stock. Vesting is determined separately for each grant. A schedule is time-based if you must...

Other than paying the exercise price, what else must I do to exercise an option?

The specific steps vary among companies. You usually first need to make an irrevocable election to exercise...

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