It's not easy to determine which type of grant is better for you. While restricted stock and RSUs are siblings, they have important differences, as explained by this FAQ, which includes a quick-reference table clearly presenting the comparison...
For a variety of reasons, including those of tax and accounting treatment, compensation policy, and stock plan provisions, employers may offer any of several types of equity-based incentives. These include...
Companies in the United States can grant two types of stock options: nonqualified stock options (NQSOs), the most common type, and incentive stock options (ISOs). The table in this FAQ summarizes and compares the major traits...
While restricted stock and RSUs are siblings, they have important differences, as explained by this FAQ, which includes a quick-reference table clearly presenting the comparison...
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...
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...
The taxation of your stock options depends on whether they are...
It's all about what leads to vesting or share payout...
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...
The table in this FAQ shows the types of taxes, when they are triggered, and the tax withholding (if any) for various forms of equity compensation granted in the United States. For details, examples, and illustrations...
401(k) plans are a type of broad-based, tax-qualified retirement plan funded by pre-tax contributions, unlike...
The types and distribution of stock grants are changing, along with the patterns of eligibility. Data from research and surveys can give a sense of how prevalent equity awards are...
One resource is the SEC's website. There you can search on the SEC's EDGAR system for the filings discussed below. Another resource is the...
Limited liability companies (LLCs), which are somewhat similar to S corporations, have membership interests and not stock. Therefore, LLCs cannot offer stock options, restricted stock, direct rights to shares, or an employee stock purchase plan. However, they can give...
Typically, only for-profit corporations are eligible to offer stock options and other stock grants...
If your employer is a for-profit corporation, it probably can offer stock options, restricted stock, or other types of equity compensation to its employees. There may, however, be many reasons why your employer is not offering stock grants...
Almost none, assuming the legal and other technical formalities are followed in creating...
The Employee Retirement Income Security Act (ERISA), whose regulations on tax-qualified retirement plans include rules for employee benefit plans such as 401(k) plans...
These rulings do affect stock plans. Among the affected federal laws and regulations are those which shape the design and administration of...
A stock plan is a formal document that contains the general rules of operation that are common to all...
Carefully read both the stock plan itself and other materials your company gives you or posts on a website. You should look at the following...
Yes. The two main types are nonqualified stock options (NQSOs) and incentive stock options (ISOs). The names indicate their...
Stock plans can be global, and in some countries they are more popular than they are in the United States. Consulting firms and other groups have conducted surveys about the use of stock compensation in both developed and emerging economies...
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...
No. Until you exercise a stock option, you do not have the rights of a...
Under SEC Rule 428(b), your company is required to give you the...
A nonqualified stock option (NQSO) is a type of stock option that does not qualify for...
An incentive stock option (ISO) is a type of stock option that qualifies for special tax treatment...
In general, an ESPP fits into one of three categories: tax-qualified, not tax-qualified, or direct purchase...
Employee stock purchase plans of this type (sometimes called "tax-qualified" ESPPs) meet the...
A vesting schedule dictates when you may exercise stock options, when forfeiture restrictions lapse on restricted stock, or when shares are delivered with RSUs. Each grant has its own vesting schedule. A schedule is time-based if...
Capital gain is income that arises from the sale of a capital asset. Gain from the sale of securities held for investment, such as shares acquired from stock compensation...
Check your company's stock plan for the allowed methods and procedures. The most common methods involve...
The tax treatment depends on the type of stock option. This website has detailed content about tax withholding and reporting in the Tax Center, which includes annotated examples.
You want to know the term of your grant to prevent valuable stock options from expiring. Most options are granted with a 10-year term, but some have a shorter life, such as...
No. You could lose them in any of the following ways...
Publicly traded stock options (or "call options") listed in newspapers...
The tax rules of a compensatory stock option are very different from those of an investor warrant. Grants of options for services are...
Common stock is the form of securities issued to the vast majority of owners of a business corporation, as in an option exercise or ESPP purchase...
Preferred stock is a class of equity securities of a corporation that is given greater rights than common stock...
Tax 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.
Want to know more? Listen to our podcasts on the basics of stock options, restricted stock, and ESPPs.
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