How does your company handle the vesting of restricted stock for employees who go on a paid or unpaid leave of absence? Does vesting continue while they are on a paid or unpaid LOA?

I've seen plans that continue vesting for things like qualified retirement (i.e. with the consent of the empoyer). I'd think that a continued vesting provision for someting like "unexpected" leave is rare and not recommended.

My personal view is that section 83's requirement that there be future substantial services performed in order to delay taxation is incompatible with the idea of allowing an inactive employee to continue vesting. There's always a noncompete agreement, but since the person is not terminated, it doesn't seem applicable.

If I were the IRS looking at such a provision, I'd argue that there is no more SRF as of the date of leave, as the employer is obviously not going to forfeit the stock, except is some rare circumstance that might kick a bad boy clause into gear-which we know is not an SRF. What good is a golden handcuff if you can vest and get paid while your not even there?

HR departments always seem to want the flexibility of not forfeiting the stock and not accelerating vesting, while at the same time delaying taxation. Restricted stock does not have this kind of flexibility.