"A 'Scenario of Least Regret,' presents a little-by-little approach that can balance the competing interests of ambition and anxiety. Dollar-cost averaging is an effective way to inch out of a concentrated stock position. Check your overconfidence level by considering what you have to lose. Reframe your thinking out of tunnel vision on the stock price and consider the things you actually want to accomplish in your life with your stock wealth.... Form a plan with an advisor just one stage at a time if necessary. Focus on what percentage of company stock you want to keep, i.e. your 'legacy anchor position.' " MORE >>
"Auditing stock-based compensation is a complex process that requires management to have a thorough understanding of the types of awards granted to employees and retain underlying contracts in an organized fashion. As part of the financial statement audit process, your auditor will aim to ensure that stock-based compensation calculations and disclosures are accurate and comply with applicable accounting standards[.]" MORE >>
"Nearly half of employees consider equity compensation ... a must-have benefit for a new job and view it as a critical tool to help achieve their retirement goals, according to a recent survey ... 37% of employees said equity compensation could help them learn more about investing, 32% said they could alleviate financial stress and another 32% said they could boost employee morale. Most notably, nearly 40% of employees said equity compensation could help them build or increase their wealth." MORE >>
"[H]alf of survey respondents see equity compensation as a vital tool to attain retirement goals. According to the research, company stock encompasses nearly one-third of participants' investment portfolios. As a result, 72% of participants believe they'll very likely reach their retirement savings goals, while 44% plan to use the benefit to finance retirement." MORE >>
"Pursuant to Code Section 83(b)(2), the election must be made not later than 30 days after the date of the Restricted Property transfer (i.e., the date of receipt by the service provider from the company). Late elections are not permitted.... While the online election mechanism will ease administrative difficulties for service providers, timely and proper filing remain critical components." MORE >>
"Company equity is a powerful tool for compensating employees, attracting investors, and aligning the interests of key stakeholders with the long-term goals of the business. It is also a complex area that requires careful planning and consideration to avoid common pitfalls. Founders should consider the equity as a resource that dilutes existing ownership and look at the long-term implications of their decisions to allocate equity." MORE >>
"The new Share Holder Allocation for Rewards to Employees Plan Act, or the SHARE Plan Act [HR 2332] ... provides a 3% tax rate reduction for US-domiciled companies that establish and maintain a SHARE plan, which is defined as a corporate program that grants common stock to employees periodically at no cost.... A key issue would be whether the tax benefit is enough to get companies to do this." MORE >>
"Although the IRS previously required taxpayers to submit section 83(b) elections via physical mail, the IRS now permits taxpayers to submit Form 15620 online via the IRS website. Because of the importance of making a proper and timely section 83(b) election, taxpayers should consider making any such elections online." MORE >>
"[E]ffective as of July 1, 2022, Puerto Rico Act No. 52-2022 amended the Puerto Rico Internal Revenue Code ... [to] allow for the operation of ESPPs in Puerto Rico.... [Some] publicly traded companies doing business in Puerto Rico are now allowing their Puerto Rico employees to participate in their ESPPs. This article summarizes the process that these companies should follow for including their Puerto Rico employees as participants in their U.S.-based ESPPs." MORE >>
"For startup founders, a Section 83(b) Election can be a highly effective tax strategy, especially when the restricted equity value at the grant date is low and there is a strong potential for growth. That said, making the election is not without risk." MORE >>
"New research ... finds that relative total shareholder return is lower and compensation higher among S&P 1500 firms that award performance share units (PSUs) versus time-based equity awards, i.e., restricted stock units (RSUs) and stock options." MORE >>
"Donating wealth to charities and passing it along to future generations are important financial goals. What planning techniques are optimal if a large portion of your wealth comes from stock compensation?" MORE >>
"While many owners of privately held businesses ... want to encourage key employees to 'think like shareholders,' they are reluctant to (or simply cannot) grant true equity interests to key employees.... [T]he answer for those privately held businesses that do offer an LTIP is a 'phantom' or 'synthetic' equity arrangement such as a Phantom Stock or Stock Appreciation Rights Plan. While each of these plan structures has certain advantages in specific situations, EBS has found the Performance Units Plan (PUP) format to be most flexible and effective in encouraging key employees to think and act like shareholders." MORE >>
"In a start-up or early-stage company where the value of the company's stock often starts off low but has the potential for significant future appreciation, founders can potentially save taxes by making an 83(b) election.... If the restricted shares are forfeited (for example, because the employee quits before the vesting date) or the shares decrease in value, the employee may be limited in their ability to recoup the taxes already paid when the 83(b) election was made[.]" MORE >>
"ESPPs drive account activity; employees in an ESPP log into NetBenefits 41% more often. Double-digit retirement savings results and longer tenure are seen at every income level, in every age group, and among both genders." MORE >>
"How can a successful family-owned business reward and retain key employees who drive company value -- without giving up ownership or control? This was the challenge facing a thriving power generation company as ownership transitioned to its third generation.... This case study demonstrates how a properly structured Performance Units Plan can solve complex compensation challenges while protecting company interests." MORE >>
"Are there forms of equity compensation that are tax-advantageous or disadvantageous to employees or employers? ... Does equity-based compensation require registration or notice? Are exemptions, or simplified or expedited procedures available? ... Are there tax withholding requirements for equity-based awards? ... Are inter-company chargeback agreements between a non-local parent company and local affiliate common? What issues arise? ... Are employee stock purchase plans prevalent or available? If so, are there any frequently encountered issues with such arrangements?" MORE >>
"Decision-making moments come at you fast when you have stock options, restricted stock units, an employee stock purchase plan, or other forms of company equity comp.... What grants do you expect? ... Job changes ahead? ... Tax planning for withholding ... ESPPs ... Tax returns ... Special issues for incentive stock options." MORE >>
"[C]ompanies are required to report the first transfer of legal title to any share purchased under an ESPP plan where the purchase price paid for the share was [1] less than 100% of the fair market value on the date of grant or [2] not fixed or determinable on the date of grant.... Participant information statements may either be delivered or mailed to the participant's last known address or, if the participant has given his or her consent to receive the statement electronically, provided in electronic format." MORE >>
"[P]aper filers must submit completed Forms 3921 and Forms 3922 with the IRS no later than February 28, 2025, and electronic filers must do so no later than March 31, 2025.... [Y]ou must provide the employee (or former employee) the information statement no later than January 31, 2025.... The information statement and return requirements under Section 6039 are not dependent on whether the exercise or stock transfer is a qualifying or disqualifying disposition." MORE >>
"With respect to ISO exercises and ESPP share transfers that occurred in 2024, Copy A of the respective form must be filed with the IRS no later than February 28, 2025, if filing on paper, or March 31, 2025, if filing electronically.... Copy B of the respective form must be furnished to the applicable employee or former employee by January 31, 2025." MORE >>
"Section 6039 of the Internal Revenue Code requires a corporation to furnish a written statement to any employee or former employee who either [1] exercised an incentive stock option ... or [2] in 2024 first transferred legal title to shares acquired under the corporation's employee stock purchase plan ... The corporation must furnish these statements on Forms 3921 and 3922 to affected participants no later than January 31, 2025." MORE >>
29 pages. "This report covers the three-year period from 2021 to 2023, and includes ... [1] Company-wide annual grant rates, measured based on annual share usage and fair value transfer.... [2] Overhang, measured based on potential share dilution as well as the fair value of outstanding grants. [3] Frequency and prevalence of long-term incentive plan share requests. [4] Allocation of long-term incentive pools to the CEO and other proxy officers." MORE >>
