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Articles (Jump to FAQs)
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.
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.
Bruce Brumberg
Stock appreciation rights, referred to as SARs, will soon start showing up in equity grants at many companies. To help you understand SARs, Part 1 explains the "appreciation," the role of exercises, and taxes at exercise.
Bruce Brumberg and Kate Victory
UPDATED! 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.
Rich Duprey
Motley Fool, 2/26/07
Restricted stock and stock appreciation rights are increasingly popular alternatives to stock options.
Don Durfee
CFO Magazine, 12/06
Companies may now consider alternatives to grants of time-vested restricted stock, such as performance shares and units. Tying stock awards to performance goals raises new complexities beyond just pleasing shareholders.
Robert Hof
BusinessWeek, 12/13/06
If it comes to pass, Google's planned transferable stock option (TSO) program will let its employees sell vested stock options as an alternative to exercising them. This can give employees additional value for the "option" part of their stock options.
Carolyn Said
San Francisco Chronicle, 8/27/06
Stock options have fallen from grace at some companies, though they are still part of the entrepreneurial culture in Silicon Valley. The chance to build an ownership stake in your company remains with various types of grants, such as restricted stock and performance shares.
Michael Sisk
Inc. Magazine, 4/05
This article summarizes the upside and downside to you and your company of the alternatives to stock options: restricted stock, stock appreciation rights, and phantom stock.
Timothy Roberts
Silicon Valley/San Jose Business Journal, 12/24/04
Even with expensing, stock options remain popular for new hires. New attitudes prevail about stock options, but restricted stock is not seen as a good alternative at pre-IPO companies. (Registration is required.)
Anita Dennis
Journal of Accountancy, July 2004
Compensation committees and corporate governance practices are treating pay differently, especially in stock options and other kinds of equity grants.
Kris Frieswick
CFO, 5/1/03
Performance-based options, restricted stock, and performance units are alternatives for executive pay, as investors are in no mood to tolerate the options status quo.
Kathleen Pender
San Francisco Chronicle, 3/30/03
Companies are designing new and more elaborate types of equity compensation to motivate and reward you.
David Henry and Louis Lavelle
BusinessWeek, 2/3/03
Pros and cons of alternative ways for providing incentives for managers other than standard options: restricted stock, cash, premium-price options, index options, and performance-based rewards.
Knowledge@Wharton
The Wharton School, University of Pennsylvania
With option expensing, companies are heading in different directions to give employees equity incentives to stay and perform well.
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FAQs (Jump to articles)
Typically, only for-profit corporations are eligible to offer stock options...
For a variety of reasons...
Restricted stock refers to outright grants of company stock to employees or other service providers...
Restricted stock always has some value to you even when the stock price drops below the price on the date of grant...
Restricted stock shares are issued up front at grant, but you do not own them outright and cannot sell or transfer the shares until the restrictions lapse. With standard restricted stock units the situation is similar, except that...
These long-term incentive plans have performance targets that, when reached by the end of the measurement period (e.g., a three-year period), trigger vesting or payout according to the structure of the plan. The payout can be all or nothing of the target payout (100% or 0%), or the grant size can be based on a sliding scale that gives you less than or even more than the target grant size. Performance share grants with payouts that can exceed the target (e.g., 150%) for exceptional performance can provide...
Starting with the broad grants of RSUs at Microsoft and Amazon, recent corporate practices suggest it is more likely that your company will grant you...
SARs, or "stock appreciation rights," are rights your company grants you to receive the value of appreciation in shares of its stock from the...
Stock appreciation rights entitle you to stock (or sometimes cash) that equals the amount...
Much of the stock option content is relevant to SARs. All the key stock option features...
A phantom stock plan is similar to stock appreciation rights (SARs) in that the recipient receives...
An employee stock ownership plan (ESOP) is a tax-qualified retirement plan designed to...
401(k) plans are a type of broad-based, tax-qualified retirement plan funded by pre-tax contributions, unlike money used to exercise options or buy stock in your ESPP. Company stock in your 401(k) can be sold only for other investments in the plan (not to fund cash needs and purchases). You have more flexibility with the shares from your stock grants because...
The tax rules of a compensatory stock option are very different from those of an investor warrant...
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...
Expensing became mandatory for calendar-year companies at the beginning of 2006. This does not change the tax treatment of options. However, because companies take an earnings charge for the "fair value" of the option grant on their income statements, companies may change their grant practices by reducing the number of stock options, moving to grant more...
Surveys show that rank-and-file employees and executives are likely to receive fewer stock options, or that grants will be made only at higher levels. In addition, the types of equity grants at companies have changed. A summary of data in surveys from 10 major consulting and research firms shows that...
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...
Yes. The most popular type of ESPP is known as a Section 423 plan, after the federal tax-code section that sets the requirements for this type of plan. Through an ESPP that qualifies under Internal Revenue Code Section 423, an employee subject to US tax law can...
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...
Receiving deferred stock units, or RSUs that let you delay the delivery of shares (and thus taxes) at vesting, depends on...
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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