When do RSUs count?

[Guest elmo27]

When are shares for RSUs deducted from the total number of available shares, at the time the RSUs are granted, or when the RSU vests? Any guidance (particularly ISS specific) on this is appreciated. Thanks much!

[401 Chaos]

You may have better luck posting on the NASPP, mystockoptions or similar boards, particularly with respect on ISS insight on some of these issues.

I suppose that may depend on the reason you are asking / counting the total shares but my sense is that the shares get counted when the RSUs are granted rather than having to wait until they vest much the same as stock options. RSUs are typically granted under a stock or equity plan of some sort that reserves a specific number of shares for making awards under the plan. When a participant gets an RSU grant (even though it is not vested) the Plan typically counts that as an outstanding award representing (at least a contingent right to) an actual share. If the RSU doesn't vest, etc., the shares could come back but unless that happens I think you need to deduct those shares from total shares remaining available. Of course companies and plans may distinguish between vested and unvested awards when tracking these or other types of shares but they generally deduct the granted shares from total available.

[Chaz]

As 401 Chaos states, it really depends on the purpose that you are counting. There is a distinction, however, between restricted stock, which is generally deemed transferred on the date of grant (and thus is subject to Code Section 83) and an RSU, which is generally deemed transferred upon vesting.

[401 Chaos]

Just to elaborate a bit on my and Chaz's comments above, I agree with Chaz's point that distinctions are generally drawn between RSAs and RSUs as to when shares are actually acquired / beneficially owned, etc. Again, key thing to keep in mind here is what you are counting / why. My main point is essentially that companies (and I would think ISS) would view shares as having been used or spoken for upon the mere grant of an RSU or other award for total share counting / dilution purposes. That seems like that has got to be the case for the simple reason that if you did not do it this way a company could easily find itself granting more awards under a plan than it reserved and even more shares than it had authorized, etc. Of course, ISS or others are free to consider the company's rate of forfeiture, etc. and factor that into their analysis when looking at the likely number of shares that will actually be granted following vesting, etc. I just think at a basic level you've got to assume that each award granted represents an actual share. Not sure if that's really the question being asked or not.