Restricted stock about to vest? What you need to do
Should you sell or hold shares at vesting? What to consider
Changes in tax rates remain uncertain celebrates 10-year anniversary
Visit us at the NASPP conference in Chicago, Sept. 20–23


While is our brand name, we could just as well be (in fact, we own the URL). This is because on restricted stock, restricted stock units (RSUs), and performance shares we have an extensive collection of engaging articles, FAQs, podcasts, calculators, quizzes, and self-study courses for CEP and CFP continuing education credits. The same is true for employee stock purchase plans, which we cover comprehensively.

These features are highly popular. Whether you're new to these types of grants or experienced with them, on our site you will find education, guidance, and tools to help you maximize their value and prevent costly mistakes. This newsletter contains samples of two FAQs to help pull you into our content on these topics.

Many of you subscribe for full access to, including all of this content plus our restricted stock calculators and other tools. We thank you for your membership (especially at the Premium or Pro levels), your content licensing, and your support in general through the years, particularly in this challenging economy.

—Bruce Brumberg, Editor-in-Chief


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Think Twice insider trading prevention videos: educate, entertain, and jolt your employees and executives (see the ad below)

Find out why E*Trade Corporate Services is the stock plan provider of choice for a quarter of the S&P 500 (see the ad below)


Below are excerpts of FAQs about restricted stock, RSUs, and performance shares. They come from the 750+ FAQs on All of our content is available for your company to license or by Premium or Pro Membership. Please do not copy or excerpt our editorial content without our permission.

My stock will vest soon. What do I need to do and decide?

Unlike stock options, which require you to come up with cash for the exercise price and taxes if you plan to hold all the shares, the vesting of restricted stock and restricted stock units does not demand much action. You will have to open an account with the brokerage firm or transfer agent that your company designates. The shares are then electronically deposited into your account from the transfer agent.

The setup needed for this account may be all online, or you may need to send a paper document with your signature to the firm. At some brokers, your company may be able to establish an account for each plan participant, and then you merely need to accept yours. 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 will owe taxes on the value of the shares at vesting, when the shares are delivered into your account. The withholding, at least for federal tax purposes, will be your supplemental wage withholding rate, plus Social Security up to the yearly maximum, and Medicare (along with any state and/or local taxes on this type of income). You will need to decide on the withholding method. These methods include 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 a default that it will use if you do not elect your withholding method by the deadline.

The decision about whether to sell or gift the shares, transfer them to another account, or change to joint ownership revolves around your personal financial-planning situation, goals, and cash. The articles and FAQs of the section Financial Planning on this website can give you some ideas about this. (See, for example, Restricted Stock: Tax, Financial, Estate, And Retirement Planning (Part 1) by Richard Friedman.)

Do I need to sell my shares at vesting?

The vesting of restricted stock, RSUs, or performance shares is separate from the sale of the shares. Whether you sell the shares at vesting depends on various factors, some of which you can control:

  • Methods of tax withholding available to you through your company's stock plan, or any mandatory share surrender. The shares can be a source of the proceeds needed to pay the taxes.
  • Tax planning. Whether you hold the shares and for how long will affect your capital gains tax at sale. Any holding period after vesting does not affect the amount of income tax due for the value of the shares at vesting.
  • Your needs for the cash proceeds and other financial-planning goals, such as diversification, dividends paid on your stock, and alternative investments.
  • Whether your company is publicly traded or privately held. In a privately held company, you will not be able to sell the shares immediately at vesting because of restrictions that are likely to exist in your grant and/or because of the SEC rules on resales.

A new tool from that can help you decide whether to hold the shares at vesting or sell them for an alternative investment is the Restricted Stock Comparison Modeling Tool.

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


It is likely that we will have to wait until after the November congressional elections before anything is decided about the pending increases in the tax rates for ordinary income, capital gains, dividends, and the estate tax, or about the AMT income exemption amounts for 2010. (For a detailed summary of the issues in play, see a recent memo from Deloitte.) If Republicans regain control of the House and pick up more Senate seats, the result could be either no change in current tax rates or a continuing stalemate. Whatever happens, it promises to be an exciting end of the year, whether you're a tax professional or merely a taxpayer. We will continue to follow related developments closely.

Our July tax alert went over the changes in some of the tax rates that will occur if the Bush tax cuts simply expire (or "sunset") without further action by Congress or, alternatively, if President Obama's proposals are enacted. While Mr. Obama has declared that he will not seek to extend the Bush tax cuts, there is some support for extending them until the economy recovers (see, for example, this article in Bloomberg BusinessWeek).

For a number of years, we have foreseen the uncertainty about post-2010 tax rates that is now flooding the headlines, and we have considered the prospects of a tax increase after 2010. Alongside our insightful articles on financial-planning strategies for possible higher tax rates in 2011 and beyond, our tools can help you with the calculations. All of our tools allow you to easily edit for changes in tax rates and stock price. In most of the situations analyzed by our authors and other experts, tax increases alone should not be the sole basis of your decision to exercise options or sell stock in 2010.

About E*TRADE Corporate Services
With over 25 years of experience, 25% of the S&P relies on E*TRADE Corporate Services for innovative, end-to-end equity compensation solutions that offer ease, choice and the flexibility to adapt to your company's unique needs. The powerful combination of E*TRADE Corporate Services and E*TRADE Securities allows us to provide stock plan administration services from six global service centers for over 1 million participants in more than 160 countries worldwide.


This summer, we marked the 10th anniversary of With our independent and unbiased expertise, has amassed a huge following among stock plan participants and professionals alike during the past decade. Our excellence in editorial content and financial-planning tools has won many awards, media accolades, and devoted members. The website has even earned a US patent for one of the tools.

We held celebrations both on our website (for our members) and in the real world (for our staff and supporters). Our online toasts at include a retrospective article: The Top Five Developments In Equity Compensation Of The Past Decade by Matt Simon, the Editor & Content-Manager at "We at have seen a lot of changes since we launched the website back in June 2000," the article begins. The piece goes on to review the top five issues and developments in equity compensation that we have witnessed and covered over the past decade.

Other developments, perhaps less foreseeable, are sure to emerge in the coming decade. During that time, as over the past 10 years, will remain your best resource for staying on top of developments affecting the financial planning, taxes, and wealth-building potential of stock compensation.

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For those of you attending the annual conference of the National Association of Stock Plan Professionals in Chicago (September 20–23), please visit us at our booth (#509) in the exhibit hall. Our educational resources are particularly useful when employees and executives are new to restricted stock, RSUs, or performance shares, when a vesting date date is about to occur, and during the upcoming seasons of year-end planning and tax returns.

Come learn about all our resources and corporate services, new features we added in the past year, and our plans for the months ahead (including a new website!). Chat with our key editorial and technology staff, and be sure to grab one of our unique and useful giveaways!

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