You should know the answers to the following questions. Understanding the topics involved will help you to make the most of your stock grants and prevent costly mistakes.

1. What type of stock grant do I have? Is it a grant of stock options, restricted stock, restricted stock units, performance shares, or stock appreciation rights?

2. How often will I receive grants? Do companies make grants only upon hiring, or will I be eligible every year?

3. Is formal acceptance of the grant required, and does it include a noncompete provision? What happens if I don't accept the grant?

4. What is the vesting schedule?

5. For stock options and SARs, what is the grant term's expiration date, after which an unexercised award is forfeited?

6. What would happen to the grant if I were to leave or lose my job, die, become disabled, or retire? How do these events affect vesting and the forfeiture of the grant?

7. Do I need to open a brokerage account for the shares or cash proceeds? If so, do I need to complete any tax forms at that time?

8. How does the tax withholding work? What is the withholding rate?

9. What would happen to the grants in a corporate acquisition or merger?

10. How do my stock grants interact with my financial plan and important life events?

Alert: Review the stock plan, grant agreement, and any related communications materials. If uncertain about any of these questions, ask the appropriate person or department at your company or prospective employer.

You also should find out whether your company has an employee stock purchase plan. If it does, what are the rules for eligibility and enrollment?

In addition, you should understand the tax treatment of the grant and learn about the related Form W-2 and tax-return reporting, including the proper reporting of stock sales. Another FAQ lists questions to ask about equity grants at private (including pre-IPO) companies.