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Annotated diagram of Schedule DTax errors can be costly! Don't draw unwanted attention from the IRS. Our Tax Center explains and illustrates the tax rules for sales of company stock, W-2s, withholding, estimated taxes, AMT, and more.


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


Articles (Jump to FAQs)

Restricted Stock Versus Stock Options: Making A Rational Choice (Part 1) This is premium content

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.

Restricted Stock Versus Stock Options: Making A Rational Choice (Part 2) This is premium content

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.

What You Need To Know About Stock Appreciation Rights (SARs): Part 1 This is premium content

Bruce Brumberg
Stock appreciation rights (SARs) are being granted by some companies. To help you understand SARs, Part 1 explains the "appreciation," the role of exercises, and taxes at exercise.

Restricted Stock Fundamentals: What You Need To Know (Part 1) This is premium content

Bruce Brumberg and Kate Victory
UPDATES! Your company has awarded you restricted stock. Restricted stock grants carry their own requirements, which you need to understand before you can profit from them. In Part 1 we discuss the rules and restrictions of vesting and sale.

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FAQs (Jump to articles)

What types of equity compensation other than stock options are offered by employers?

For a variety of reasons...

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...

What is the difference between restricted stock and performance shares or units? This is premium content

Shares of restricted stock are issued up front at grant, but you do not own them outright and cannot sell or transfer the shares until the time-based restrictions lapse. With standard restricted stock units the situation is basically similar, while with performance shares your company sets goals that must be met, such as...

UPDATES! What types of company goals are most commonly set for performance shares and units? What do surveys show about the performance metrics and periods that companies use? This is premium content

Stock-based performance plans have targets that, when reached by the end of the measurement period, trigger vesting or payout according to the structure of the plan. Various surveys show that the most common metrics are...

Which do companies grant more often: restricted stock or restricted stock units (RSUs)? This is premium content

Starting with the broad grants of RSUs at Microsoft and Amazon, recent corporate practices and survey data suggest it is more likely that your company will grant you...

What are stock appreciation rights?

SARs, or stock appreciation rights, are contractual rights that entitle you to receive the appreciation from a corresponding number of company shares after the grant date. Instead of exercising a stock option, you...

How do stock appreciation rights (SARs) differ from stock options, restricted stock, and RSUs? This is premium content

Stock appreciation rights entitle you to stock (or sometimes cash) that equals the amount...

Does all the stock option content on this website also apply to stock appreciation rights (SARs)?

Much of the stock option content is relevant to SARs. All the key stock option features...

What is a "phantom stock plan"? This is premium content

Phantom stock is similar to stock appreciation rights (SARs) in that you receive a sum based on the appreciated value of the company's shares. But instead of shares of stock, phantom stock awards are in the form of...

What is an "employee stock ownership plan"?

An employee stock ownership plan (ESOP) is a tax-qualified retirement plan designed to...

How do stock options, ESPPs, and restricted stock differ from the company stock fund or contribution offered under my 401(k) plan? This is premium content

401(k) plans are a type of broad-based, tax-qualified retirement plan funded by pre-tax contributions, unlike...

How does a stock option offered to an employee differ from a stock warrant acquired by an investor? This is premium content

The tax rules of a compensatory stock option are very different from those of an investor warrant...

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...

When did stock option expensing become mandatory? How does this affect and change my stock grants? This is premium content

Expensing became mandatory for calendar-year companies several years ago. Because companies take an earnings charge for the "fair value" of stock option grants on their income statements, companies have changed their grant practices by reducing the number of stock options, moving to grant more...

UPDATES! What do surveys and examples reveal about the effects of expensing, stock market trends, and other developments on equity compensation? This is premium content

A summary of data in surveys from major consulting and research firms shows that...

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...

What are the different types of employee stock purchase plans? What are their features? This is premium content

In general, an ESPP fits into one of three categories: tax-qualified, not tax-qualified, or direct purchase...

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...

As a director, can I elect to take part of my retainer as "deferred stock units"? This is premium content

Receiving deferred stock units, or RSUs that let you delay the delivery of shares (and thus taxes) at vesting, depends on...

What are "discounted" stock options, and how are they taxed? This is premium content

Stock options are usually granted with an exercise price equal to the fair market value (FMV) of a share of company stock on the grant date of the option. Once it falls below the FMV they become discounted stock options, which raise multiple issues, including...

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