Bruce Brumberg
NEW! As part of your year-end and year-beginning tax planning, don't forget to review any restricted stock grants that vested this year, plus other company stock holdings. This article presents five strategies that many experts suggest.
Stanley Trotta with Robert Gordon
President Obama's tax proposals seem likely to raise rates after 2010. Should you take action with stock compensation now or wait until new rates apply? Part 2 looks at restricted stock and restricted stock units.
W.E.B. Bantling and Michael Beriss
UPDATED FOR 2009! The time for tax planning is
before the year ends; tax season is too late. For year-end 2009, learn about several ideas that apply to nonqualified stock options (NQSOs) and restricted stock/RSUs. Meanwhile, look ahead at the likelihood of tax rate changes under President Obama.
Richard Friedman
Understand financial planning for restricted stock and RSUs. Part 1 discusses the growing popularity of these grants, their special features, and the related tax planning.
Richard Friedman
Careful planning can help you maximize the value of restricted stock and RSUs by preparing you for decisions you must make. Part 2 covers complex issues in financial, estate, and retirement planning.
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.
Tom Davison
Vesting is another crucial time for making decisions about your restricted stock. Decisions include what tax-withholding method to use, whether you should hold or sell the stock, and what account to keep the shares or cash in after vesting.
Bruce Brumberg
myStockOptions.com
This PowerPoint presentation (in PDF) provides tips and suggestions from myStockOptions.com on explaining restricted stock and RSUs to employees and executives. (Please allow up to a minute for the PDF to fully load in your browser.)
Don Durfee
CFO Magazine
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.
Return to top of this page
The outcome depends on how well your company's stock price does in the years after the grant date and on the ratio of stock options to restricted shares, among other factors. To calculate whether the appreciation of stock option gains equals or exceeds restricted stock gains, you need to...
Restricted stock has full value to you at vesting, regardless of whether the stock price has dropped after the grant date. This leads companies to grant fewer shares of restricted stock (or restricted stock units) than stock options. The ratio used to give a restricted stock grant an equivalent "value" to that of existing stock option grants depends on different factors. Common ratios are...
Expensing became mandatory for calendar-year companies at the beginning of 2006. This does not change the tax treatment of your stock option grant. However, because companies take an earnings charge for the "fair value" of stock option grants on their income statements, companies may change their grant practices by reducing the number of stock options, moving to grant more...
A summary of data in surveys from 10 major consulting and research firms shows that...
Yes. Although the calculation is simpler than that for stock options, it has complexities of its own. For restricted stock and RSUs, the expense is based on the fair value at...
With variable grant guidelines your company determines grant size according to...
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 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...
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. Data from varoius surveys show that the most common metrics are...
Consulting firms have studied the use of stock compensation in both developed and emerging economies. Stock options remain popular, but interest is growing in restricted stock/RSUs and performance shares. Among surveyed countries...
Stock appreciation rights entitle you to stock (or sometimes cash) that equals the amount...
If your skills are in great demand, employers may...
With a few exceptions, the grant, vesting, or exercise of stock options, or the vesting of restricted stock, should not affect your other retirement-plan benefits. One notable exception...
There is some. In 2009, the Ayco Company informally surveyed 250 large US companies that grant restricted stock or RSUs. The survey found...
This depends on the terms of your company's plan document and your grant agreement as well as on the reason for the absence. Some plans give you vesting credit for...
Companies either include maternity in their short-term disability policy (and suspend vesting, regardless of the reason for the short-term leave) or...
Under some stock plans, if you are temporarily disabled and your employment is not terminated, you...
Most likely, retirement will cause your company to do neither. Retirement is a type of termination of employment under your stock plan. Only a small minority of companies either let the stock options continue to...
Some companies let the standard time-based vesting schedule accelerate if...
Successful completion of venture financing is a typical performance goal for a startup company. A public company might...
Provisions vary according to the terms of your grant and stock plan. These provisions can be triggered when...
Most stock plans do not permit this for restricted stock or stock options. Lenders would also not accept restricted stock as collateral because...
Not unilaterally. Although no specific law exists on this question, courts have examined this situation and provided some guidance...
These provisions are not as common with restricted stock as they are with stock options...
Stock ownership guidelines specify how much company stock you must own in total or as a multiple of salary. Most companies count in the calculation the...
In theory, when a company pays a dividend, particularly a large special dividend, its stock value declines by...
Dividends and the shareholder voting rights that go with restricted stock do not...
Not until the restricted stock vests. Then the stock is...
You cannot be charged just for the vesting of restricted stock, as no sale of securities occurs. However...
Both Rule 10b5-1 and the broader use of restricted stock and RSUs are new, so practices and procedures are evolving. Companies are considering the widespread use of Rule 10b5-1 plans for this...
If you are a "reporting person" under Section 16(a) of the Securities Exchange Act of 1934 (i.e., you file Forms 3, 4, or 5), then you are also subject to the short-swing profits liability provisions that match purchases and sales within six months. This matching period is calculated from the date of...
Within two business days of the grant, you file Form 4 electronically under the SEC's Section 16 rules. At vesting, depending on the withholding method...
Yes. Assuming the company's grant met the rules for exemption under Section 16, the grant and vesting are not matchable...
Yes, but the arrangement must be carefully structured not to be considered a stock option or nonrecourse loan...
In a quest to start your one-year capital gains holding period and minimize the amount of ordinary income associated with an award or grant, you may...
First a court must decide (under the relevant state's laws) whether the property subject to division includes...
You should read the terms of your stock plan and grant agreement. If the plan allows transfer upon death to beneficiaries, you should obtain the...
Not necessarily. If an acquirer is using its stock to pay for shares of your company, then the purchase will be denominated in stock according to one of several methods...
In many plans unvested options accelerate in some way...
Return to top of page
Test your knowledge with our Restricted Stock & Restricted Stock Units quiz.
Listen to our new podcast on restricted stock and restricted stock unit basics!
