Your grants are about to vest: what you must decide
Why companies grant restricted stock/RSUs instead of stock options
Multimedia educational resources on restricted stock, RSUs, and performance shares
Engaging videos on restricted stock/RSUs
Survey shows popularity of restricted stock and performance share awards
Financial-planning tools for restricted stock and RSUs
CE course on restricted stock, RSUs, and performance shares



This issue of our quarterly newsletter showcases some of our award-winning content on restricted stock, restricted stock units, and performance shares. Although our trusted brand name is myStockOptions, we could just as easily be myRestrictedStock, given our extensive and engaging articles, FAQs, videos, podcasts, and quizzes on restricted stock/RSUs and the related financial planning. Below you will find information about FAQs, articles, podcasts, and videos that give a taste of our expertise on this and every other topic in stock compensation. For much more, click through to our main content section on restricted stock and RSUs and the related parts of the Tax Center.

Thank you for using If you do not yet subscribe to Premium or Pro Membership, giving full access to our content and tools, year-end and tax-return season is a great time to upgrade. All of our content and tools are also available for licensing.

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FREE APP! Have stock compensation? Work with stock plans? Both? Now you can keep our valuable equity comp expertise at your fingertips with our free app for iPhones, iPads, and Android smartphones: Stock Compensation Glossary, available from the App Store (for Apple devices) and from Google Play (for Android devices). Based on the popular glossary at, this handy, searchable reference guide defines almost 1,000 terms in the areas of equity compensation and executive compensation, including terms used in the related taxation, corporate accounting, and securities law.

This week marks 17 years since we launched! Thank you for using our website and for your support and feedback over the years. We continue to enjoy helping grant recipients and their companies get more value from stock plans.

We hope you enjoy your summer!

—Bruce Brumberg (Editor-in-Chief)

Two FAQs On Restricted Stock And Restricted Stock Units (RSUs)

My restricted stock will vest soon. What must I do and decide?

You have some choices but fewer than you would with stock options, which prompt a decision about exercise timing and the exercise method to use. By contrast, restricted stock and restricted stock units do not impose these decisions as vesting approaches. Earlier, you may have had to accept the restricted stock/RSU grant, though that is not as common as with options.

Alert: If your company requires formal acceptance of the grant agreement, the delivery of the shares at vesting may be suspended until you accept it.

Open A Brokerage Account

Before the vesting date, you will have to open an account with the brokerage firm or transfer agent that your company designates. At vesting or share delivery, the shares are then electronically deposited into your account from the transfer agent.

Alert: It is important that you open an account, as your company may have a policy of not delivering shares unless you have done so. You should also complete either IRS Form W-9 (for US tax residents) or IRS Form W-8BEN (for nonresident aliens) to certify your tax status.

The setup needed to activate this account may be all online, or you may have to send a paper document with your signature to the firm. With some brokers, your company may be able to establish an account for each plan participant that you merely need to accept.

Tax Decisions

You will owe taxes on the value of the shares at vesting, when the shares are delivered into your account. At least for federal tax purposes, the withholding is required to be at the rate for supplemental wages (usually 25%, though it is 39.6% for aggregate amounts above the level of $1 million during a calendar year). In addition, there will be Social Security tax up to the yearly maximum, along with Medicare (plus any state and/or local taxes on this type of income).

Alert: If this rate is insufficient to cover the tax imposed by your federal and state marginal tax rates, you may need to pay estimated taxes.

You will need to decide how you will provide the taxes that must be withheld. The choices may include using cash, selling enough shares to cover the taxes (a sell-to-cover), or share withholding (i.e. some of the shares are held back for the taxes). Your company may have a mandatory withholding method, in which case you don't have to make a decision, or it may have a default that it will use if you do not elect your withholding method by the deadline.

Some RSU plans have a deferral feature, which lets you decide when to receive the shares after vesting and thus lets you delay the ordinary income tax until the time of share delivery. These deferral plans must carefully follow the IRC Section 409A election rules for nonqualified deferred compensation.

Hold, Sell, Or Gift?

The decision about whether to sell or gift the shares, transfer them to another account, or change to joint ownership depends around your personal financial-planning situation, goals, and cash. A related FAQ presents some points to consider when making that decision.

Alert: You should confirm that you have certified IRS Form W-9 or Form W-8BEN for the account with the brokerage firm or transfer agent. If it does not have this form, you will be subject to backup withholding on the gains from any sale of shares or on other investment income in your account.

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Eaton Vance Investment Managers: Goals-based solutions for optimizing wealth

Eaton Vance offers strategies and tools to help financial advisors and investors:

  • Diversify or manage the risks of concentrated stock holdings
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Financial advisors: Call our Wealth Strategies Group at 617-672-8500.

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Why do many companies grant restricted stock and RSUs instead of stock options?

The compensation philosophies of companies are continually changing under the influence of many factors, including competitor practices, accounting rules, economic conditions, and investor attitudes. Surveys indicate that restricted stock is now at least as popular as stock options, and many companies use a variety of grants. Companies granting stock options say the long-term potential upside of options—and the fact that options have value only if the stock price rises after grant—makes them better than restricted stock at focusing employees and executives on long-term corporate success. However, there are many reasons why companies may prefer restricted stock and RSUs:

  • These grants will always have tangible worth for employees (i.e. they do not go underwater), making them better for retaining employees.
  • The accounting is less complex, and there is less dilution.
  • Shareholders, especially institutional investors, view restricted stock more favorably, as the reputation of stock options has been tarnished, perhaps unfairly, by scandals such as backdating.
  • With restricted stock, it is easier to add vesting features that are based on corporate or external performance measures.
  • For privately held companies, restricted stock can avoid the valuation issues of setting an exercise price and the risk of granting discounted stock options, which incur tax penalties.

Which Is Better?

The question of whether you should prefer restricted stock over stock options depends on various factors. For more details on the reasons why some companies prefer RSUs over restricted stock, see another FAQ.

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AdvisorFind Directory
Find a financial, tax, or legal advisor with experience in stock compensation

Stock compensation raises many questions.

  • How much should you contribute to your ESPP?
  • When should you exercise stock options?
  • Should you sell or hold restricted stock at vesting?
  • How can you diversify your company stock holdings?
  • How can you minimize your tax bill?
  • How do you negotiate for stock compensation in your employment agreement?

While is a good place to learn about concepts, issues, and general strategies in equity compensation, at some point you may need an advisor to help with your unique situation. Yet finding a good advisor can be hard when you are busy and don't know where to start. The AdvisorFind Directory from is for you.

  • Identify and contact an expert who can provide specialized professional guidance on equity compensation.
  • Search for advisors by geographical area, type of advisor, years of experience, minimum portfolio size, and other key criteria.
  • Look up resources for performing background checks on advisors.

Searching AdvisorFind is free and does not require registration at

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Multimedia Educational Content On Restricted Stock, RSUs, And Performance Shares

Below we list articles, podcasts, and an interactive quiz about restricted stock and RSUs in the award-winning content of For our engaging videos on these topics, see the next section of this newsletter.

The extensive section on restricted stock and RSUs at is complemented by an interactive quiz and a self-study course and exam for CFP and CEP continuing-education credits. All of this content is available with Premium or Pro Membership or through corporate licensing.


NEW! Ten Financial-Planning Rules You Should Know About Restricted Stock And RSUs by the myStockOptions Editorial Team
While grants of restricted stock and RSUs are conceptually simple, financial planning for them can be complex. This article presents the essential financial-planning points that you should consider before your restricted stock or RSU grant vests.

Restricted Stock Units Made Simple (Part 1): Understanding The Core Concepts by the myStockOptions Editorial Team
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. This article is available free!

Restricted Stock Units Made Simple (Part 2): Taxation by the myStockOptions Editorial Team
The taxation of RSUs generally resembles that of restricted stock but carries some important differences, as this article explains.

Restricted Stock 101: Five Essentials Of Restricted Stock & RSUs by the myStockOptions Editorial Team
While restricted stock and RSUs are relatively straightforward, they have technical aspects you must understand to make the most of them. Learn the essential facts of restricted stock and RSUs, including basic concepts, vesting schedules, and tax treatment.

Why You'll Learn To Like Restricted Stock Grants by Richard Friedman
Podcast included! Your company may no longer be using stock options. Instead, it may be granting restricted stock, restricted stock units, or performance shares. While these grants don't carry the same upside as stock options, they have benefits you will surely appreciate once you understand their special features.

Restricted Stock: Tax, Financial, Estate, And Retirement Planning (Parts 1 and 2) by Richard Friedman
Podcast included! 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. Part 2 covers complex issues in financial, estate, and retirement planning.

Restricted Stock Versus Stock Options: Making A Rational Choice by 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. Part 1 compares and contrasts the basic traits of restricted stock and stock options. Part 2 provides a method of analysis to help your decision-making.

Stockbrokers' Secrets: Restricted Stock And Performance Shares by W.E.B. Bantling
For many employees, receiving restricted stock, restricted stock units, or performance shares adds a new layer of complexity to their equity compensation. This article presents six common questions the author hears from his clients.

Performance Shares by Bruce Brumberg
Many companies now make stock grants that base your gains on more than just your continued employment or an increase in stock price. As companies take a "portfolio approach" to stock compensation, you may be granted performance shares, which you receive only upon the achievement of specified goals. Part 1 explains the basics of performance share grants. Part 2 explores their structure in depth, along with the concept of expiration and the impact of job termination. Part 3 explains the taxation of performance share grants and then goes on to discuss the special tax considerations that arise in corporate mergers and acquisitions.

Decisions At Grant With Restricted Stock by Tom Davison
When your company grants you restricted stock, it promises to let you keep a set number of shares on a particular date in the future. The stock becomes yours if you still work for the company on the vesting date. In the typical case, you do not pay for the shares. Part 1 presents what you need to know at grant and the decisions you can make. Part 2 discusses the risks of the Section 83(b) election. Part 3 explains ways to analyze your alternatives.

Decisions At Vesting With Restricted Stock by Tom Davison
Vesting is another crucial time for making decisions about your restricted stock. Part 1 explores 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. Part 2 looks at key vesting decisions.


Basics Of Restricted Stock And Restricted Stock Units
Running time: 8:05. In this audio interview, the editor-in-chief of explains how restricted stock and RSUs work, including grant, vesting, sale, and taxation.

Why Restricted Stock And RSUs Are A Good Deal
Running time: 11:37. Compensation expert Richard Friedman explains what makes restricted stock and restricted stock units valuable equity awards. This interview is a companion to Mr. Friedman's article on this topic in the Restricted Stock section of the website, where he also has articles on financial and tax planning for restricted stock and RSUs.

Restricted Stock Units After An Acquisition: Know What Could Happen
Running time: 13:36. When a company is merging or being acquired, its employees wonder what will happen to their unvested RSUs. In this interview, wealth advisor Kristin McFarland explains the potential outcomes for holders of unvested RSUs and current equity holders in an M&A deal. This interview is a companion to her article on this topic.


Test your smarts with our free interactive quiz on restricted stock and RSUs. In addition to being fun, the quiz is also a course of study. The answer key links to content on the topic for followup reading.

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Restricted Stock/RSU Videos At Offer An Engaging Way
To Present Basic Concepts And Taxation continues to seek innovative ways to make stock plan education easier for busy, work/life-juggling employees. Among our multimedia offerings, we have a pair of lively, professionally produced video presentations on restricted stock and RSUs.

In Restricted Stock & RSUs (Part 1): Key Aspects To Know, Editor-in-Chief Bruce Brumberg presents the fundamentals of restricted stock and RSUs to help stock plan participants make the most of these grants. The coverage includes key concepts, such as vesting schedules and understanding a grant's value. Running time: 4:37

In Restricted Stock & RSUs (Part 2): Taxes And Related Key Decisions, Bruce explains the basic tax treatment of restricted stock and RSUs, including the tax rates, the timing of taxation, and withholding. Running time: 3:57

At, these videos appear in the sections Restricted Stock: Basics and Restricted Stock: Taxes. By enticing viewers into the subject of their equity comp, the videos provide a helpful gateway to our more detailed content on the related topics.

We welcome your comments on the videos, which exist alongside others on ESPPs and stock options. As with much of our content, our videos can be licensed and customized by your company.

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Survey Shows Popularity Of Restricted Stock And Performance Share Awards

For its study 2017 Trends And Developments In Executive Compensation, Meridian Compensation Partners surveyed 118 companies to uncover current practices in equity grants for executives. For their senior executives, 90% of the surveyed companies use two or three types of long-term grants. For grants to employees at lower levels, the use of just one type is more common. Meridian discovered the following about the prevalence and weight of LTI vehicles for executives.

Type of award % of companies Performance awards (dollar weight in total LTI value) Stock options (dollar weight in total LTI value) Restricted stock (dollar weight in total LTI value)
Performance awards, stock options, and restricted stock 22% 44% 27% 29%
Performance awards and restricted stock 55% 58% 42%
Performance awards and stock options 11% 51% 49%
Stock options and restricted stock 2% 28% 72%
Performance awards only 8% 100%
Restricted stock only 0% 100%
Stock options only 2% 100%
Overall (averages) in 2017 100% 56% 13% 31%
Overall (averages) in 2016 100% 55% 16% 29%

An FAQ on presents numerous other surveys which show that many companies use a variety of grants in tandem, including restricted stock/RSUs and performance shares.

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Insider Trading Prevention And Education:
Think Twice Video And Intranet Series
Request free previews at the Think Twice website

Insider-trading prosecutions are a major priority of the SEC and the Justice Department. For two decades, the dramatic Think Twice video series has been a vital training and compliance resource for thousands of corporations and law firms trying to prevent insider-trading violations. The Think Twice videos are celebrated for enhancing the value of corporate education by entertaining viewers with compelling stories.

Used by over 1,000 companies and developed with input from the SEC Enforcement Division, these powerful and memorable story-lines will drive home key points on:

  • what insider trading is
  • the penalties and consequences
  • how the SEC discovers illegal activity
  • what happens if illegal tipping or trading is suspected
  • how SEC investigations are conducted

For more information on the Think Twice video series, and a free white paper on insider trading prevention and education, see the Think Twice website. Both DVD and VHS formats are available. Qualified corporate buyers, including new IPO companies, can request free previews. Intranet licensing is available.

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Financial-Planning Tools For Restricted Stock And RSUs

Easy to use and secure, the tools for financial and tax planning at can help you make smart decisions with your restricted stock or RSUs.

To learn more about all of the features in these award-winning online applications, see the myTools page at

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CE Course On Restricted Stock, RSUs, And Performance Shares

The Learning Center has courses of study and exams that offer:

  • 30 continuing-education credits for Certified Equity Professionals (100% of the total requirement!)
  • 15 continuing-education credits for Certified Financial Planners
The course on restricted stock, RSUs, and performance shares features articles, FAQs, videos, and a podcast from on all aspects of these grants. They are woven into a dynamic, interactive learning tool that teaches the topics in a memorable way. In the exam that follows the course, the answer key also links to relevant content on the site for further reading and learning.

Other courses offered through the myStockOptions Learning Center focus on nonqualified stock options, employee stock purchase plans, SEC law for stock compensation, and financial planning with equity awards. Built on a similar model, the the Learning Center on nonqualified deferred compensation offers up to 6 continuing-education credits for Certified Financial Planners, 6 Professional Achievement in Continuing Education (PACE) credit hours for CLU® and ChFC® certifications, and up to 12 CPE hours for credentialed ASPPA members.

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