Kate Victory
UPDATED! How typical are your grants of stock options or restricted stock? Compare their terms and provisions with corporate stock grant data from the NASPP's
Domestic Stock Plan Design Survey.
Kate Victory
UPDATED! It's hard to find comparative data on grants of stock options and restricted stock. The NASPP's Domestic Stock Plan Surveys for 2010 and 2011 include data on grant guidelines, expiration provisions, job termination exercise rules, and M&A.
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.
Richard Friedman
UPDATED! Get a sense of what you should, and should not, expect in the terms of your stock option grant. This survey of 300 companies looks at trends in vesting schedules, post-termination exercise rules, and other plan features.
Bruce Brumberg
UPDATED! The days of exercising your stock options, pocketing the gains, and leaving the company for a direct competitor may be over. Your company may put noncompete forfeiture provisions in your stock grants.
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FAQ Table of Contents:
Process
Rules
Job Events
Advanced
Process
Stock grants, such as options or restricted stock, are typically determined by the group or person that sets cash compensation levels and bonuses at your company. The full board, compensation committee, or authorized officer of the company then...
Changes in executive compensation and equity pay practices stemming from the downturn of 2008 and 2009 were predicted to be extensive and vigorous. Experts at consulting and research firms have been busily analyzing corporate stock plan practices since then...
Stock options often cannot be exercised until they are vested, and then they are profitable only after...
Unlike public companies or large private companies that may have grant guidelines, most private companies determine the grant size by a combination of factors. Surveys show that...
The value of an option consists of two elements: time premium and intrinsic value. Intrinsic value is the difference...
The full board of directors, the compensation committee, or an executive with expressly delegated authority...
In most cases, your exercise price for stock options is...
Only for ISOs directly, though even NQSO exercise prices need to follow the rules on nonqualified deferred compensation to avoid becoming discounted stock options. ISOs must be granted at a price which is at least equal to the...
You want to know the term of your grant to prevent valuable stock options from expiring. Most options are granted with a 10-year term, but some have a shorter life, such as...
Usually, if the vesting date falls on a non-business day...
You need to check your stock plan's provisions and the procedures/practices followed by your company or any outside stock plan administration firm. Usually...
A stock grant agreement is a form your company uses to grant you an equity award. Grant agreements can be in the form of...
Depending on the type of equity award, a stock grant agreement can have one or several pages setting forth a range of terms for you to review, including...
Though this varies from industry to industry and among peer companies, most companies use a combination of...
With variable grant guidelines, your company determines grant size according to a target dollar value rather than...
Look at your grant agreement...
First, you may be eligible to receive only NQSOs, so read the FAQs on the requirements of ISOs...
Yes. While almost all companies make awards to eligible new employees...
Companies tend to grant options at hire and only periodically thereafter to reward performance...
Some companies have more than one stock plan. When a company offers just one omnibus plan...
A stock split occurs when a company wishes to lower its share price to permit more investors to be able to...
Dilution refers to the effect that a grant of stock options (or other equity grants, such as restricted stock) has on the other shareholders of a company. Each time an option is granted...
Most stock option plans automatically adjust your options for the stock split. Your number of options will be...
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Rules
In the United States and in most countries stock options are not taxed at grant. The Internal Revenue Code...
The useful chart below gives the types of taxes, and when they are triggered, for various forms of equity compensation granted in the United States...
No. Companies are not required to have broad-based, company-wide stock grants, although they cannot discriminate in deciding who is eligible. Employers have extraordinary...
Almost none, assuming the legal and other technical formalities are followed in creating...
Many companies have broad-based stock plans that extend to the lowest-level employees, including hourly and part-time workers...
For a public company to issue stock options properly under federal securities laws, it must furnish each participant in its stock option plan with a "prospectus"...
Generally, the exercise price cannot be raised without your written consent...
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...
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...
Nonqualified stock options (but not incentive stock options) can be granted without a formal plan...
Yes, as long as your company's stock-option plan permits both to be granted. The decision to do so belongs to your company...
No, except in very limited circumstances. For example, if you obtained your job by fraudulent means, your grant could be revoked...
Not unilaterally. Although no specific law exists on this question, courts have examined this situation and provided some guidance...
Yes. Traditionally, however, union representatives have abjured equity compensation and profit-sharing for...
Rarely. Temporary employees are usually not employed long enough at a company to vest in stock options...
Yes. Many startup companies cannot give their employees the benefits and human-resource assistance that are provided by large employers...
You do not become a shareholder until you...
Generally, no violation occurs if you receive a grant of stock options when you know secret stock-price-moving information about your company. However, the SEC has focused severely in recent years on...
It is unresolved whether in-the-money stock options that the bankrupt individual holds (1) constitute assets of the bankrupt party that are reachable by the creditors or (2) are...
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Job Events
The likelihood depends mainly on your position, its salary grade, and/or your company's industry. Surveys of common practices among companies show that...
In most instances, stock grants are subject to the same types of practical limitations as negotiations for your cash compensation. For example, an employer may...
Usually companies keep this information private...
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...
If you are convinced that you have been treated unfairly...
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Advanced
Companies set the exercise price at some premium to the current market price as an additional...
In its 2008 study of stock plans in many countries, the National Association of Stock Plan Professionals surveyed...
Dilution affects both private and public companies, and additional issues arise for private companies...
They occur at numerous companies...
Reverse stock splits are an effort by a company to reduce the number of shares...
This is a special feature included in a stock option at the time of grant. It provides for...
Most plans reload/regrant options equal to the number...
The number of companies, and their employees, with underwater stock options has substantially increased, especially since the historic drop of the stock markets in October 2008. Various surveys and corporate examples show that...
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