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<< Older News  |  December 4, 2020

News

All News > Stock Plans

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Planning for Early Retirement When You Have Equity Compensation
Kiplinger Link to more items from this source
Nov. 3, 2020

"Current evidence indicates that fewer than one-fourth of employees have ever exercised their stock options ... If you do plan to exercise your options and use your equity compensation in retirement, you might have to satisfy certain conditions, including an age-at-retirement requirement and a length-of-service requirement.... [E]ven if you meet these requirements at the time you decide to retire, it is possible that under a company plan you still may not be entitled to receive any of your unvested shares."

Tags: Retirement Plan Information for Employees  •  Stock Plans

Restricted Stock and RSUs: Questions to Ask to Make the Most of Your Grant
myStockOptions.com Link to more items from this source
Oct. 30, 2020

"[1] Do I have a grant of restricted stock or a grant of restricted stock units? What are the key differences? [2] Is formal acceptance of the grant required? What happens if I don't accept the grant before vesting? [3] What is the vesting schedule? [4] Is vesting based on duration of employment or on performance goals? [5] What would happen to the vesting of my grant if I were to leave or lose my job, die, become disabled, or retire? [6] When the shares vest, what account will they appear in? [7] Does the company offer a choice for the tax withholding, or does it hold back shares to pay the taxes? [8] With RSUs, can I defer the delivery of the shares at vesting? [9] If my company pays dividends to shareholders, will I get dividends on my restricted stock? If so, when? What if I have a grant of RSUs instead? [10] What would happen to my restricted stock in a corporate acquisition or merger?"

Tags: Stock Plans

Employees with Company Stock Plans Welcome More Financial Advice as COVID-19 Drives Some Participants to Exercise or Sell Shares
Charles Schwab Link to more items from this source
Oct. 20, 2020

"While the majority of participants are planning to use their equity compensation for retirement (51%), there was a slight uptick overall this year in those turning to their equity compensation to help meet immediate financial needs, like paying off debt (9%, up from 5% in 2019) and short-term emergencies (7%, up from 5% in 2019). Notably, Millennials have experienced a more pronounced impact compared to other generations and may be in more need of help in developing a financial plan. Ninety-five percent (95%) of Millennials who recently exercised or sold equity compensation report that the pandemic influenced their decision, and almost a third (27%) of this group did so because they were under financial stress."

Tags: Coronavirus (COVID-19)  •  Stock Plans

Stock Purchase Plans and 401(k)s: Not an Either/Or Proposition
PLANSPONSOR; free registration may be required Link to more items from this source
Oct. 20, 2020

"Historically, retirement plan industry experts have been concerned that employees who have access to a 401(k) and an employee stock purchase plan (ESPP) are faced with an 'either/or' decision ... [New] data demonstrates that when employees have access to both plans, in an integrated environment, combined participation is associated with better retirement savings behaviors and greater overall financial wellness."

Tags: 401(k) Plans  •  Stock Plans

2020 Aggregate Share-Based Compensation (PDF)
FW Cook Link to more items from this source
Sept. 21, 2020

31 pages. "This report covers ... 2017 to 2019, and includes the following: [1] Company-wide annual grant rates ... [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 ('Top 5')."

Tags: Executive comp  •  Stock Plans

Pandemic Sharpens Focus on Employee Financial Wellness
Strategic Benefits Advisors Link to more items from this source
Sept. 21, 2020

"To gauge how well employees are utilizing their benefits, plan sponsors can ask their administrators to answer [specific] questions ... If the data shows employees aren't taking full advantage of the financial features of their benefits, additional employee education and communication may be in order."

Tags: 401(k) Plans  •  Health Plan Design  •  Retirement Plan Design  •  Stock Plans

IRS Shortens Period to Deposit Payroll Taxes for Certain Stock-Settled Awards
Hall Benefits Law Link to more items from this source
Sept. 10, 2020

"The IRS has issued an internal procedural update [dated May 26, 2020] that shortens the deadline for depositing employment taxes for certain stock-settled awards from three business days after exercise to two business days after exercise, and expands the application of the administrative waiver of late employment tax deposit penalties for stock options to stock-settled restricted stock units (RSUs) and stock-settled appreciation rights (SARs)."

Tags: Stock Plans

Restricted Stock, Restricted Stock Units, Restricted Securities: Understanding the Differences and Why They Matter
Bruce Brumberg, in Forbes Link to more items from this source
Sept. 3, 2020

"[Restricted Stock Units (RSUs)] are now the most frequently granted equity awards in public companies. However, companies, employees, and financial advisors often call RSUs 'restricted stock' or 'restricted securities.' ... [T]hose three things are not the same. As a lawsuit by current and former Uber employees shows, it's important to know what type of stock grant you have and its tax treatment."

Tags: Stock Plans

COVID-19 and Key Issues to Consider in Executive Compensation Programs
Hall Benefits Law Link to more items from this source
Aug. 31, 2020

"Equity award vesting and furloughs ... Performance-based compensation ... Compensation compliance obligations ... Pre-negotiated severance pay.... Deferred salary and pay reductions.... Trading cash for equity.... Severance plans or policies ... Option pricing and repricing."

Tags: Executive comp  •  Stock Options  •  Stock Plans

Time for a Checkup for Your Equity Incentive Plan?
Foley & Lardner LLP Link to more items from this source
Aug. 25, 2020

"[1] Review your share reserve to confirm that the plan has a sufficient number of shares remaining for future awards.... [2] [C]onfirm whether the plan has an expiration date.... [3] [R]eview plan documents to determine whether repricing is permitted ... [4] [R]eview the [performance] metrics to determine if they are still reasonable and sufficiently motivating to executives.... [5] Double-check plan/corporate governance and documentation requirements."

Tags: Stock Plans

Fast Facts About Restricted Stock Units
Foley & Lardner LLP Link to more items from this source
Aug. 19, 2020

"[1] How are RSUs different from restricted stock? ... [2] Popularity continues to be high.... [3] RSUs can defer time of income taxation.... [4] Recent IRS guidance on the taxation of RSUs: ... [5] FICA may be due earlier than income taxes.... [6] RSUs can solve retirement vesting tax issue.... [7] RSUs can reduce state tax liability.... [8] RSUs can help executives satisfy stock ownership guidelines requirements.... [9] RSUs allow flexibility over dividend rights.... [10] RSUs allow flexibility over settlement in shares or cash."

Tags: Stock Plans

Differences Between Incentive Stock Options and Nonqualified Stock Options
Davis Wright Tremaine LLP Link to more items from this source
July 24, 2020

"[T]here are some significant potential tax benefits that ISOs have over NSOs, but ... many recipients of ISOs never see those benefits. Primary differences between ISOs and NSOs [are shown in a side-by-side comparison chart] ... [T]the full tax benefits of ISOs are only realized if an employee exercises the ISO and holds the stock for more than a year prior to a company sale or other liquidity event."

Tags: Stock Options  •  Stock Plans

When Are RSUs 'Deferred Compensation' for FICA Purposes?
Cohen & Buckmann, P.C. Link to more items from this source
[Guidance Overview]
July 20, 2020

"How short-term deferral is defined for this purpose is significant because many awards vest December 31 and settle early in the next year. [Generic Legal Advice Memorandum No. AM 2020-004] would mean the FICA point is in the first year, not the year of payment. The lag method under the 3121(v)(2) regulation would allow remission of the FICA tax in year two, but the income amount will be based on the FMV at December 31, increased with interest, not the FMV at the time the employer initiates the transfer in year two. As a result, the income inclusion and FICA amounts are almost guaranteed to be different."

Tags: Executive comp  •  Stock Plans

Employees with ESPP Purchases During Stock Market Drop Reaped Big Gains In Rebound
Bruce Brumberg, in Forbes Link to more items from this source
July 1, 2020

"Employees at companies with ESPP purchases during the stock-market lows of March and April 2020 experienced meaningful gains of over 40% in the market rebound as of mid-June ... ESPPs with a discount and a lookback feature are a good deal even in a down market. This discount calculation would come off of the lower purchase date price, even without a lookback."

Tags: Coronavirus (COVID-19)  •  Stock Plans

Select Administrative Issues to Consider When Granting Equity Awards
Hunton Andrews Kurth Link to more items from this source
June 12, 2020

"[1] Verify the equity plan's share reserve not exceeded.... [2] Verify compliance with any holdover 162(m) sub-limits.... [3] Verify compliance with any requirement that the equity award contain a minimum 1-year vesting schedule.... [4] Verify share reserve on form S-8.... [5] Verify compliance with director sub-limits.... [6] Verify compliance with any prior delegations of authority.... [7] Service provider must be a 'natural person.' "

Tags: Stock Options  •  Stock Plans

How Employee Stock Purchase Plans Can Offer Shelter in Down and Volatile Markets
myStockOptions.com Link to more items from this source
June 10, 2020

"Sometimes an ESPP can still be a good deal even when the company's stock price falls. Here's what you need to know for participating in your company's ESPP with a falling or volatile stock price. The good news: ESPPs can't go underwater.... Volatility does not always matter.... The bad news: limits on the amount of stock you can purchase.... Special plan features in down markets."

Tags: Stock Options  •  Stock Plans

A Potential Alternative to Repricing Underwater Stock Options?
Winston & Strawn LLP Link to more items from this source
Apr. 27, 2020

"[E]arlier this month the SEC essentially gave fast-track approval of the New York Stock Exchange's request to provide temporary waivers of the shareholder approval requirements applicable to certain kinds of equity issuances under the NYSE's Listed Company Manual. Although focused on capital raising, this waiver could provide an alternative to option repricing for officers and directors at some companies."

Tags: Coronavirus (COVID-19)  •  Stock Options  •  Stock Plans

Stock Options and Valuations: Tax Focus
Fox Rothschild LLP Link to more items from this source
Apr. 23, 2020

"This article discusses the tax consequences of Restricted Stock (RS), Incentive Stock Options (ISO) and Nonqualified stock options (NQO). In addition to the tax consequences for employees, there are tax and accounting implications for the company.... [G]enerally, when the employee recognizes ordinary compensation income, the company will have a deduction for compensation income, and a charge to accounting income as well."

Tags: Retirement Plan Information for Employees  •  Stock Options  •  Stock Plans

Editor's Pick COVID-19: Stock Option Repricing Considerations During the Pandemic
K&L Gates Link to more items from this source
Apr. 16, 2020

"Stock option repricings take many forms and entail many issues and considerations, including: [1] Shareholder approval requirements under exchange listing rules; [2] Guidelines from institutional investors and proxy advisory firms; [3] Incremental accounting charges under Accounting Standard Certification (ASC) Topic 718; [4] Self-tender offer rules under the Securities Exchange Act of 1934 ... [5] Registration and exemption rules under the Securities Act of 1933 ... [6] Tax implications under the Internal Revenue Code  ... and [7] Analogous state laws."

Tags: Coronavirus (COVID-19)  •  Stock Options  •  Stock Plans

Compensation and Benefits Issues for Employers in Light of the COVID-19 Pandemic
Goodwin Procter Link to more items from this source
Apr. 8, 2020

"[1] Cash conservation, salary reductions and deferral arrangements ... [2] Stock option repricing programs ... [3] Impact on performance-based compensation arrangements ... [4] Furloughs, layoffs, and benefits continuation ... [5] Section 125 plan election changes ... [6] Retirement plans and relief provisions in the CARES act ... [7] Suspending employer contributions to retirement plans ... [8] RIFs and partial plan terminations  ... [9] Plan terminations  ... [10] Plan fiduciary considerations."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Health Plan Administration  •  Health Plan Design  •  Retirement Plan Administration  •  Stock Plans

Tax Season 2020: What You Need To Know About Changes In Reporting Rules For Capital Gains, AMT, And Equity Comp
myStockOptions.com Link to more items from this source
Feb. 11, 2020

"While this year the IRS modifications are less drastic, there are key differences, especially in the way capital gains are reported.... A concern for anyone with incentive stock options (ISOs), the alternative minimum tax (AMT) is no longer directly reported on Form 1040 from the calculation on Form 6251.... For stock sales, there is still no change in the IRS rules on how the cost-basis information is reported on Form 1099-B and Form 8949."

Tags: Stock Options  •  Stock Plans

Editor's Pick ISO and ESPP Reporting and Disclosure Requirements for Employers
Hanson Bridgett LLP Link to more items from this source
[Guidance Overview]
Jan. 30, 2020

"[A]ll corporations whose employees or former employees exercised an incentive stock option (ISO) or made a purchase under the corporation's employee stock purchase plan (ESPP) in 2019 ... must furnish an information statement on Form 3921 (ISO) or Form 3922 (ESPP), as applicable, to each employee (or former employee) by January 31, 2020. You must also file information returns with the [IRS] by February 28, 2020, if filing on paper, or March 31, 2020, if filing electronically."

Tags: Stock Options  •  Stock Plans

Employee Benefits and Executive Compensation Topics to Address in the New Year
Epstein Becker Green Link to more items from this source
Jan. 15, 2020

"[1] Addressing cybersecurity for benefit plans: what to do when it's all at risk ... [2] COBRA notice class action lawsuits offer a cautionary tale for sponsors ... [3] Plan distribution check is taxable even if uncashed ... [4] Balancing student loan repayments and retirement savings ... [5] Mitigating your company's equity plan risk."

Tags: COBRA  •  Retirement Plan Administration  •  Retirement Plan Design  •  Stock Plans

Important Equity Compensation Reporting and Compliance Reminders
Frost Brown Todd LLC Link to more items from this source
[Guidance Overview]
Jan. 7, 2020

"Employers are required to annually report to the IRS all Incentive Stock Option (ISO) exercises and share purchases under an Employee Stock Purchase Plan (ESPP) with an exercise price less than 100% of the fair market value of the stock. The employer must report ISO exercises on Form 3921 and ESPP shares purchases on Form 3922 in the year after the exercise or purchase. A separate Form 3921 or 3922 must be filed with the IRS for each transaction, even if a single participant has multiple transactions in a single year."

Tags: Stock Plans

Year-End Planning: Strategies for Stock Options, Restricted Stock/RSUs, and ESPPs
myStockOptions.com Link to more items from this source
Dec. 18, 2019

"[Year-end planning strategies should be considered if:] [1] You are planning to sell the stock at exercise late this year or early next year.... [2] You are over or near the yearly maximum for Social Security.... [3] You expect next year to trigger the additional Medicare tax.... [4] Your restricted stock or restricted stock units (RSUs) vested this year.... [5] You exercised incentive stock options (ISOs) this year, you still hold the stock, and the stock price dropped substantially.... [6] The stock price rose (or fell) after your exercise of nonqualified stock options (NQSOs) or your restricted stock/RSU vesting this year.... [7] You want to donate stock or cash."

Tags: Stock Options  •  Stock Plans


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