Life Events
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Life Events - Disability

Life Events › Disability

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Disability And Death: What Happens To Stock Options, Restricted Stock/RSUs, And ESPP Participation? This is premium content

Disability and death are subjects that few people like to think about, but they are important topics for employees who have stock compensation. Every stock plan has provisions on the treatment of equity compensation in the case of these life events, so you and your family members should understand those plan features just in case they come into play. This article presents the common ways in which stock plans treat grants upon the disability or death of employees.

FAQs

What happens to my stock grants if I become temporarily disabled?

Under some stock plans, if you are temporarily disabled and your employment is not terminated, you...

What happens to my stock options if I become permanently disabled? This is premium content

If your disability is total and permanent, most option plans treat you as if you have terminated employment, and thus...

What would happen to my unvested restricted stock or RSUs if I were to die or become disabled before the vesting date? This is premium content

The treatment of unvested restricted stock and RSUs upon death or disability depends on the terms of your stock plan and the specifics of your grant agreement. In its 2019 Stock Plan Design Survey, the National Association of Stock Plan Professionals observed the following related practices among the companies in its survey group...
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UPDATES! What would happen to my performance share grant if I were to lose my job, retire, become disabled, or die? This is premium content

When you have a performance award and leave the company for a standard reason (e.g. going to work for another company, being laid off) before the end of the performance cycle, you usually lose all rights to receive the grant, even if...

How is permanent disability usually defined? This is premium content

For NQSOs, no definition of disability is specified by law. Employers have great discretion here in drafting their plans. Many plans define disability...

Are the disability rules the same for ISOs? This is premium content

Not necessarily. If a plan wants to allow optionholders more than three months (but not more than one year) to exercise an ISO after termination of employment...

Does income from stock options affect my payments under disability policies or pension plans? This is premium content

It may. Your payments are rooted in your pre-disability or pre-retirement earnings in some way. Courts have addressed this issue...

Does vesting continue while I am on a leave of absence, sabbatical, or furlough?

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...

Does the reason for my leave of absence, sabbatical, or furlough affect vesting? This is premium content

Yes, according to the terms of your stock grant and any flexibility given by your plan administrator. Usually you...

Does maternity leave stop my vesting?

Companies typically take one of the following two approaches...

What are the most common periods after termination during which stock options can be exercised? Does the reason (e.g. disability, retirement) matter?

Usually, you will have time after you leave the company to exercise your options. However, some companies...

Do special rules determine when a leave of absence is a termination of employment for the purposes of ISOs? This is premium content

For ISO purposes, a bona fide leave of absence greater than three months can constitute a termination of employment if...
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