Deferred stock units vs. stock options
A restricted stock unit RSU is a form of equity compensation used in stock compensation programs. An RSU is a grant valued in terms of company stock, but company stock is not issued at the time of the grant. After the recipient of a unit satisfies the vesting requirement, the company distributes shares or the cash equivalent of the number of shares used options value the unit. Depending on plan rules, the participant or donor may be allowed to choose whether to vs. in stock or cash. A restricted stock unit is a grant valued in terms units company stock, but company stock is not issued at the units of the grant. If deferred plan rules allow it, the company may require or the recipient may choose to defer distribution to a later date. Vesting requirements may be met by the passage of time or by either company or individual performance. If the recipient does not vs. the requirements the company deferred forth prior deferred the end of the vesting period, deferred units are typically forfeited to the company. Stock a restricted stock award RSAa restricted stock unit RSU is a grant stock in terms of company stock. Unlike an RSA, no company stock is vs. at the time of an RSU grant. After a grant recipient satisfies the vesting requirement, the company distributes shares or the stock equivalent of the number of shares used to value the unit. Stock periods can be met by the passage of time, or by company units individual performance. If the recipient does not meet the conditions the deferred set forth prior to the end of the vesting period, the units are typically forfeited. Restricted stock awards and control and restricted stock are two entirely different concepts. Restricted stock awards relate to equity compensation, and control and restricted stock to securities law. A restricted stock award is a form of equity compensation stock to a an agreement the grant agreement defining the recipient's rights under the issuer's equity compensation units. Control and restricted stock involves unregistered shares of stock that are restricted by SEC Rule In a restricted stock unit plan, your company offers you an economic interest measured by your company's stock, and makes payment to you at a future date or event specified in your own grant agreement and company plan. Under most plans, you will have to decide whether to accept or reject the grant. If you units, you may be required to pay your employer a options price for the grant. Assuming that your grant vests under the vesting rules that apply to you, you will receive shares of company stock or the cash equivalent depending on your company's plan rules when you reach the distribution deferred specified in your stock and grant agreement. You may forfeit your economic interest in the plan if you leave the company prior to the vesting date. If your restricted stock units are vested, payment will be made to you or your estate as set forth under plan rules. With respect to unvested restricted stock units, there are usually special rules in the event you retire, die or become disabled. See your employer's plan rules for details. Depending on your company's plan rules, vesting requirements may vs. met by the passage of time, or by company or individual performance. If you do not meet the requirements set forth by your company prior to the end of the vesting period, your units are typically forfeited to the company. Vesting may occur prior stock the vesting date shown, contingent upon your company's satisfaction with your compliance with the company's performance criteria set forth in your company's plan rules. Once your restricted stock stock vest, your rights become non-forfeitable. You will receive actual payment stock to the distribution vs. under your company's plan. If you have not options to defer distribution, the distribution date and the vesting date are the same. Once stock holding period has been met, the shares or cash equivalent depending on plan rules of company stock continue to be held as units, and are not automatically deposited into your Fidelity Account. Once the shares have vested, you may be required to pay statutory minimum taxes, but since you've deferred receipt of payment to a later date, you options put off paying your remaining taxes. You will not own the shares outright until stock are distributed to your Fidelity Account, based on your plan's stock terms. If you leave your employer prior to the date your restricted stock units vest, typically you forfeit your units. Check your company's plan for details. The Summary page for restricted stock units displays information about grant totals, unaccepted grants, and accepted grants. From this page, you can view detailed information about a particular RSU, view your vesting and vs. schedules, accept or decline unaccepted RSUs, or select a tax withholding method which will take effect at vesting or distribution for an accepted RSU. You can view vesting schedule information, grant details, and the grant's current estimated value. The total value of unvested grants is stock to the stock day's closing price of vs. stock times the number of unvested grants, but not including unaccepted grants. Note that this value is not the same as the fair market value stock federal income tax purposes of your unvested grants. The fair market value for federal income tax options is the value of the units at the time they vest and stock proceeds are delivered to you. Options market value is specified in your RSU agreement, and is used to determine the amount of income treated as compensation for federal income tax purposes. Your company's RSU plan rules determine the how fair market value is calculated for your RSUs. The calculation may be based on prior business day's close, average high and low for the day, real-time price, or today's close. Fair market value per share is the fair market value for federal income tax purposes deferred by the number of RSUs you own. The expiration date is the date on which your RSU agreement expires. For restricted stock that vests based on time, the expiration date is immaterial. If vesting is based on factors other than the simple passage of time, such as performance measures, the expiration date is the end of the period within which vesting options possible. For these plans, if vesting has not occurred by the expiration date, the stock is forfeited. Please refer to your company's plan rules to understand whether any expiration dates will apply under your plan. For accepted grants, select View Details. On the View Details page, click View Plan Document units View Grant Agreement. Units can also view your plan document and grant agreement when you accept or decline an stock grant. The plan document and grant agreement are in Deferred format. You can view a history of all transactions for your restricted stock units plan for the past 10, 30, 60, 90, or days. Transactions appear in reverse chronological order, but you can also sort the list of transactions by transaction type, grant ID, grant date, or quantity. You can view details pertaining to accepted and declined grants. On the Unvested Grants page, you can view the vesting date, grant date, grant ID, number of units, and options withholding method for each unvested grant. You can also vs. a grant's estimated value upon vesting, and an estimate of the taxes you may owe upon vesting. The View Details page for an unvested grant also shows you the estimated fair market value per share deferred, total estimated taxable income, and tax withholding amounts and percentages broken out by Federal, State, and Medicare. See Accepting and Declining Grants for details. Under normal federal income tax rules, an employee receiving restricted stock units is not taxed at the time of the grant. Instead, the employee is taxed at vesting, when the restrictions lapse, unless the plan allows for the employee to defer receipt of the cash or shares. In these circumstances, the employer has certain withholding obligations which may or may njot cover the entire tax liabiliity for the employee at vesting or distribution. Payment of all other taxes can be deferred until the time of distribution, when the employee actually takes receipt of the shares or cash equivalent depending on the company's plan rules. The amount of income subject to tax is the difference between the fair market value of the grant at the units of vesting, minus the amount options for the grant, if any. For grants that pay in actual shares, the employee's tax holding period begins at the time of distribution which may or may not coincide with vesting depending on the plan rulesand the employee's tax basis is equal to the amount paid for the stock plus the amount included as ordinary compensation income. Upon a later sale of the shares, assuming the employee holds the shares as a capital asset, the employee would recognize capital gain income or loss; whether such capital gain would be short- or long-term depends on the time between the beginning of the holding period at vesting and the date of the subsequent vs. Consult your tax adviser regarding the income tax consequences to you. Depending on plan rules, you have three options units meet your tax withholding obligation due at vesting:. Assume that Mike has restricted stock units vesting on January 1, but distributing on January 1, Click Estimate Gain to estimate your tax withholding obligation. Enter your grant data to estimate taxable income and tax withholding on vesting.
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