Executives and board members often acquire shares through various equity compensation mechanisms, including option exercises, stock purchases under an employee stock purchase plan,
restricted stock grant and settlement of restricted stock units.
In addition, on the first eligible restricted stock granting date after the date of the company's Annual Meeting of Stockholders each year, each non-employee director, provided that he or she has served on the board for at least one year, and if he or she continues to serve as a member of the board, will receive an automatic annual
restricted stock grant for the number of shares with a market value equal to USD160,000.
In this case, the
restricted stock grant would he exempt from Section 162(m) even if the stock ultimately vests after the end of the reliance period.
For the
restricted stock grant, we assumed that shares were sold to pay taxes as it vested, but the remaining shares were held for the duration of the 10-year period.
3) Similarly, we identify the first appearance of a
restricted stock grant to the CEO position by requiring that it coincides with either zero restricted stock holdings or with restricted stock holdings less than or equal to the value of the grant divided by the stock price at the end of the fiscal year.
For example, if you received a
restricted stock grant at $50 per share and it didn't vest until the shares were trading at $70, you would be subject to income tax on the $70 price.
Under the new agreement, Smith received a
restricted stock grant of 26,246.
If I were in the decision-making chair of a public company, I would scrap any NSO plan I had and replace it with a
restricted stock grant program.
An election that recognizes compensation income on the acquisition of stock (either through a
restricted stock grant or the early exercise of an option) prior to the actual vesting of the stock.
Further, the
restricted stock grant will vest 25% on 31 January 2012 and 25% on each one year anniversary thereafter.
The more modest variability of gains on a
restricted stock grant also is presented under FAS 123(R) as a fixed matter.
