Restricted Stock, RSUs, Performance Shares Quiz

Test your knowledge of restricted stock, restricted stock units, and performance shares.

Please answer the following 12 questions. This quiz is also a course of study. The answer key links to content on the topic for follow-up reading. For in-depth courses of study that offer CE credits, see the myStockOptions Learning Center.

1. What is restricted stock?

A type of stock option The collective term for a grant of stock units A grant of company stock you must register with the SEC A grant of company stock that you cannot sell until vesting

2. How long after grant does restricted stock usually expire?

It never expires, unless your employment ends before vesting 10 years, unless your employment ends before vesting 10 years, regardless of whether your employment ends before vesting When you retire

3. What happens to vested restricted stock?

50% of the stock is rolled into another company benefit, usually a 401(k) The stock becomes yours to hold or sell after a lockup period of 180 days The stock becomes yours to hold, sell, or gift, like any other stock purchased on the open market The company requires you to hold it for a set period, usually three years, before selling

4. When is restricted stock normally taxed?

At grant At vesting At grant and vesting Never

5. Which is one difference between restricted stock and restricted stock units (RSUs)?

An RSU is one share of restricted stock You don't get shareholder voting rights with RSUs With RSUs, vesting must be time-based With RSUs, you pay tax at retirement

6. What do you accomplish with a Section 83(b) election on restricted stock?

Trick question: the 83(b) election is not available for restricted stock You choose to be taxed on the value at vesting instead of at grant You choose to be taxed on the value at grant instead of at vesting You choose to be taxed at grant instead of sale

7. What do you accomplish with a Section 83(b) election on restricted stock units?

Trick question: the 83(b) election is not available for RSUs You choose to be taxed at grant instead of vesting You choose to be taxed at vesting instead of grant You lock up the shares for the long-term capital gains holding period

8. Which of the following would probably not accelerate the vesting of restricted stock?

A stock split A merger An initial public offering Your retirement

9. What types of tax withholding apply to restricted stock?

Federal, Social Security, and Medicare Federal, state, and/or local (if any) Social Security and Medicare All of the above

10. When does the capital gains holding period start if you have not made the Section 83(b) election?

At grant On the vesting date On the day after the vesting date When the shares show up in my account

11. How does a performance share grant differ from a standard restricted stock/RSU grant?

Performance shares are a type of stock option granted to senior executives and directors Performance shares carry greater tax benefits than restricted stock does Performance share vesting or payout is based on the achievement of set goals rather than length of employment Performance shares give you a direct share in your company's profits

12. Which of the following is an example of a metric that US companies often apply to performance share grants?

Increased earnings per share Increased total shareholder return relative to that of competitors Revenue growth All of the above

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