Basics: Grants
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Articles (Jump to FAQs)
Kate Victory
Can't find comparative data on stock option and restricted stock grants? Read the results of surveys, including data on approaches to vesting, exercise, and underwater stock options.
Kate Victory
UPDATED! Finding comparative data on stock option and restricted stock grants is difficult. Here we provide survey data on grant guidelines, expiration provisions, job termination exercise rules, and M&A.
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 in 2007 looks at trends in vesting schedules, post-termination exercise rules, and other plan features (includes some details on restricted stock grants).
Bruce Brumberg
The days of exercising your stock options, pocketing the gains, and walking to a direct competitor may soon be over. Your company may put noncompete forfeiture provisions in your stock grants.
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FAQ Table of Contents: (Jump to articles)
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...
Stock options often cannot be exercised until they are vested, and then they are profitable only after...
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...
A stock grant agreement is a form your company uses to grant you an equity award...
Depending on the type of equity award, a stock grant agreement can be...
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...
First, you may be eligible to receive only NQSOs, so read the FAQs on the requirements of ISOs...
Look at your grant agreement...
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...
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...
No. While there is a trend toward broad-based...
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"...
Almost none, assuming the legal and other technical formalities are followed in creating...
Generally, the exercise price cannot be raised without your written consent...
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...
No. You do not become a shareholder until you exercise...
Generally, there is no violation in receiving a grant of options when you know material nonpublic information. However, a range of other issues can arise, ranging from fiduciary duties to concerns related to backdated or springloaded grants. The SEC is now focused on the practices of...
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 chances depend mainly on your position, its salary grade, and/or...
In most instances, stock grants are subject to the same types of...
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...
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...
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