How are restricted stock units different from stock options


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Whether it is expected or not, job loss is an upheaval that gives you a lot to think about. However, as you clear off your desk, don't forget your stock compensation. Know the post-termination rules of your stock grants.

How to Sell Restricted Stock | Finance - Zacks

A more common reason that employees hold on to their RSUs is the straightforward hope of growing richer. When I suggested to one 75-something client that he sell his RSUs and invest the proceeds in a diversified portfolio, he basically accused me of being a buzz kill.

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If you are a founder and are receiving restricted stock with nominal value (penny a share or something like that), you should do an 88b election because the total tax bill will be nominal and you do not want to take a tax hit upon vesting later on as the company becomes more valuable.

For the past six weeks, we ve been talking about employee equity on MBA Mondays. We ve covered the basics, some specifics, and we ve discussed the main form of employee equity which are stock options. Today we are going to talk about two other ways companies grant stock to employees, restricted stock and restricted stock units (RSUs).

I have a client who received RSU from her employer (an American company). Her benefit was included in her income on her T9. Her company does it a different way. They pay the necessary taxes, CPP & UI if necessary, then they ask her to pay the company back for the amount of taxes they paid on her behalf. If this amount was not included in her tax deducted at source then can she claim it on her tax return (adding it on to her taxes deducted at source)?
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A stock option grant with a strike price of $65 has no value when the stock trades at $8. Restricted stock awarded when trading at $65 is still worth $8. A stock option has lost 655% of its value. The restricted stock has only lost 75%.

Many companies are concerned by the Financial Accounting Standards Board (FASB) recommendation that stock options be shown on the company s expense sheet. Especially high-tech and start-up companies are concerned because they fear losing one of their great motivating tools. They needn t worry. There is already a better compensation choice, restricted stock options.

Control the timing of future income recognition. Gain (or loss) would be recognized only when the stock is actually sold and would not be triggered by the lapse of restrictions at vesting.

The time right after you have completed your tax return is ideal for big-picture financial planning. You can more accurately project your income and likely tax situation for this year and the next to develop your strategy. This article series discusses factors to consider in your income and tax projection, along with planning ideas.


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