Stock Plan Services Global Glossary

 A

account certification account certification	the process of verifying tax identification information; Fidelity Stock Plan Services (Fidelity) uses Form W-9 for U.S. citizens and Form W-8 for nonresident aliens and foreign entities
affiliates affiliates	officers, directors, policy-making executives, major shareholders (generally owners of 10% or more of outstanding shares), and other people who are in a position to directly or indirectly control the management of the company; this includes spouses, family members who live with the affiliate, and other entities affiliated with affiliates, as defined in Rule 144; someone with this designation is subject to trading restrictions regardless of whether the security is restricted; an affiliate must complete Rule 144 documentation and comply with Rule 144 when selling control securities; also known as control persons or insiders
alternate identification alternate identification	the option to create a different user ID to help protect your participant number; when accessing your Stock Plan Account, you provide this ID and password in place of your participant number; defaults to your participant number until you decide to change it
alternative minimum tax (AMT) alternative minimum tax (AMT)	a separate tax system, complementary to the U.S. federal income tax system; the AMT system attempts to make sure that anyone who benefits from certain tax advantages will pay at least a minimum amount of tax
average high and low for the day average high and low for the day	one of the ways a company determines the fair market value of your award at the time of exercise or vesting; it means that your plan looks at the highest and lowest trading prices of your company stock for the day and uses the average of the two prices to calculate the following: - taxable gain - withholding taxes for nonqualified stock options (NSOs) - alternative minimum tax (AMT) for incentive stock options (ISOs)

 B

beneficiary beneficiary	the person you choose to receive your awards or shares after you die; helps ensure that the assets in your Stock Plan Account are distributed according to your wishes
blackout period blackout period	a time frame determined by your company when you are restricted from exercising or selling your shares; be sure to check your plan rules for more details

 C

capital gains tax capital gains tax	a tax on the profit from selling your shares
capital loss capital loss	happens when your shares have decreased in value and are sold for a lower price than what you paid
cashless exercise cashless exercise	a method for taking action on your stock option using the cash proceeds from the sale of your company stock to pay for the purchase at your fixed price (the grant price), required tax withholdings, and fees; you get the remaining cash proceeds which are deposited into your Stock Plan Account; you do not have to provide cash to take action if you choose this method; also known as exercise and sell
company match (ESPP) company match (ESPP)	the amount of shares your company purchases on your behalf, in addition to any shares purchased with your ESPP contributions
control persons control persons	officers, directors, policy-making executives, major shareholders (generally owners of 10% or more of outstanding shares), and other people who are in a position to directly or indirectly control the management of the company; this includes spouses, family members who live with the control person, and other entities affiliated with control persons, as defined in Rule 144; someone with this designation is subject to trading restrictions regardless of whether the security is restricted; a control person must complete Rule 144 documentation and comply with Rule 144 when selling control securities; also known as affiliates and insiders
cost basis cost basis	the purchase price or “original value” of a stock plan award for tax-filing purposes; used to calculate your capital gains or losses (the difference between the original value and the current market price)

 D

discount (ESPP) discount (ESPP)	an amount, predetermined by your company, that reduces the price per share you will pay; discounts vary by plan and are usually from 1% to 15%; be sure to check your plan documents for details
disqualifying disposition disqualifying disposition	the sale, transfer, or exchange of shares that happens before meeting the IRS-mandated time frames; your Stock Plan Account shows you the date you can sell to keep the beneficial tax treatment - for incentive stock options (ISOs): one year from the exercise date or two years from the date the stock options were granted - for qualified employee stock purchase plans (ESPPs): more than one year from the purchase date and more than two years from the offering date (the date the offering period begins)
distribution date distribution date	the date your award will pay out, which is often a few days after vesting
distribution method distribution method	the way your restricted stock will be given to you: - cash deposited in your Stock Plan Account - shares deposited in your Stock Plan Account - in your paycheck through your company’s payroll
dividend dividend	money paid from company profits to people who own shares; this is typically paid quarterly

 E

early release window early release window	a period of time during the lockup when you are allowed to sell a specific percentage of your shares
employee stock purchase plan (ESPP) employee stock purchase plan (ESPP)	a type of plan that gives you a convenient way to buy your company stock; if you enroll, you choose a dollar amount or percentage to be deducted from your paycheck, and those deductions accumulate to purchase company stock, sometimes at a discount, on a predetermined schedule
enrollment period enrollment period	a company-determined period of time, when you, as an eligible employee, can enroll in the employee stock purchase plan (ESPP) by selecting how much you want to contribute from your paycheck; during this time, you may also be able to change existing elections; the ability to make changes depends on your plan; be sure to check your plan documents for details
equity compensation equity compensation	a way for employers to reward employees with company shares; this is in addition to your paycheck and other benefits and is usually intended to incentivize you to stay with the company for an extended period of time
ESPP discount ESPP discount	an amount, predetermined by your company, that reduces the price per share you will pay; discounts vary by plan and are usually from 1% to 15%; be sure to check your plan documents for details
ESPP withdrawal ESPP withdrawal	a request to return ESPP contributions accumulated before they are used to purchase shares; this means no shares will be purchased for that period; the ability to make this request depends on your plan; depending on your plan, you may be required to re-enroll to continue contributions after withdrawing; be sure to check your plan documents for details
estimated proceeds estimated proceeds	the approximate value of cash or shares you can expect after placing your order based on the current price of your company stock; this value shows your proceeds after costs or taxes are deducted; your actual proceeds may be different as the market fluctuates
exercise exercise	to "exercise an option" means to act on the right to buy or sell your company stock at a predetermined price (see grant price), at or before the expiration date
exercise and hold exercise and hold	a method for taking action on your stock option using your cash to purchase and hold shares of your company stock at your fixed price (the grant price); if you choose this method, you will need to have money available in your Stock Plan Account to pay the cost of the shares, required tax withholdings, and fees
exercise and net exercise and net	a method for taking action on your stock option using shares from your option to cover the purchase of your company stock at your fixed price (the grant price); if you choose this method, your company withholds shares so that you do not have to sell shares to cover the cost, required tax withholdings, and fees; you keep the rest of your shares, which are deposited into your Stock Plan Account; also known as stock option netting
exercise and sell exercise and sell	a method for taking action on your stock option using the cash proceeds from the sale of your company stock to pay for the purchase at your fixed price (the grant price), required tax withholdings, and fees; you get the remaining cash proceeds, which are deposited into your Stock Plan Account; you do not have to provide cash to take action if you choose this method; also known as cashless exercise
exercise and sell to cover exercise and sell to cover	a method for taking action on your stock option to sell enough of your company stock to pay for, or cover, the purchase of company stock at your fixed price (the grant price), required tax withholdings, and fees; you keep the remaining shares, which are deposited into your Stock Plan Account; you do not have to provide cash to take action if you choose this method
exercise date exercise date	the first date you can take an action on your stock options to start the process of getting shares of your company stock or cash
exercise price exercise price	the fixed price determined by your company that you will pay to purchase shares of company stock when you exercise your stock option; also known as grant price
expiration date expiration date	the last date you can take action on your stock options; after this date, your options have no value; expiration dates on non-market days, such as weekends and holidays, can affect timing; be sure to check your plan documents for details

 F

fair market value (FMV) fair market value (FMV)	the market value of your company stock at the time an option is exercised; your plan documents outline how this is calculated and will be used for federal income tax purposes; your FMV will be one of the following: - prior business day’s close - average high and low for the day - real-time price - today’s close

 G

go public go public	the process by which a privately held company first offers shares of stock to the public for purchase; typically done through an initial public offering (IPO)
grant grant	an award for stock or cash given to you by your company
grant agreement grant agreement	a document issued by your company outlining the number of shares, grant/exercise price, vesting schedule, and other terms for your stock awards
grant date (ESPP) grant date (ESPP)	the first day of the ESPP offering period, unless stated otherwise in your plan documents
grant date (stock awards) grant date (stock awards)	the date the award was given to you by your company; also known as issue date
grant ID grant ID	the code assigned to each new option or award that helps you differentiate between your awards
grant price grant price	the fixed price determined by your company that you will pay to purchase shares of company stock when you exercise your stock option; also known as exercise price
grant type grant type	distinguishes whether your stock option is a tax-advantaged incentive stock option (ISO) or a nonqualified stock option (NSO)

 H

holding period holding period	the amount of time that shares or options must be held before they can be sold, exercised, or transferred; if applicable, these are described in your plan documents
holding requirement holding requirement	the amount of time that your ESPP shares must be held before they can be sold or transferred; if applicable, these are described in your plan documents

 I

in the money in the money	when the current market price of your company stock is above your stock option grant price
incentive stock option (ISO) incentive stock option (ISO)	a stock option is an opportunity your company gives you to purchase a certain number of your company’s shares at a fixed price (the grant price) within a specific period of time - ISOs meet IRS requirements for special tax treatment; when certain conditions are met, this means that you do not have to pay regular income taxes when you exercise your stock options if you keep your shares for the later of one year from the date you exercised (the exercise date) or two years from the date your stock options were granted (the grant date); also known as the waiting period - if you decide to sell your stock option shares after the waiting period, you will be subject to a capital gains tax on the difference between the sale price and the grant price - if you sell your shares prior to or on the one-year anniversary of the date on which the shares were granted, the shares you sell are subject to a disqualifying disposition; this generally means that you will be required to pay income tax on the difference between the grant price and the fair market value when you exercise the stock options - if you exercise the stock options prior to the two-year anniversary of the grant date, hold them, and then sell them between the one-year and two-year anniversary of the grant date, you pay short-term capital gains on the difference between the grant price and the fair market value on the date you sold the shares - calculations for Alternative Minimum Tax (AMT) may be applicable
initial public offering (IPO) initial public offering (IPO)	the first time a privately held company offers its shares for sale to the public, which means they are transitioning from private to public ownership; done when companies want to raise funds for financing business plans, capital expenditures, or growth opportunities; see also go public
inside information inside information	any information about a security, or an issuer of a security, that is material nonpublic information (MNPI); information is generally considered to be material if a reasonable investor would consider the information important in making an investment decision; information may also be material if it is likely that the price of a security would change if the information were made public; information is nonpublic if it is not generally available to the public in a widely used medium
insider trading policy insider trading policy	a set of guidelines for trading in company securities; trading while in possession of material nonpublic information (MNPI), or communicating this information to others who may trade, is a violation of U.S. federal securities laws; as a result, many companies will set up insider trading policies to help protect against these occurrences
insiders insiders	officers, directors, policy-making executives, major shareholders (generally owners of 10% or more of outstanding shares), and other people who are in a position to directly or indirectly control the management of the company; this includes spouses, family members who live with the insider, and other entities affiliated with insiders, as defined in Rule 144; someone with this designation is subject to trading restrictions regardless of whether the security is restricted; an insider must complete Rule 144 documentation and comply with Rule 144 when selling control securities; also known as affiliates and control persons
intrinsic value intrinsic value	the difference between your company's price on the stock exchange and the grant, or exercise price of your stock option
i-Number i-Number	a number created for you by Fidelity Stock Plan Services to access your Stock Plan Account; this number is unique to you and helps keep your information safe and identify you as the owner of the account; also known as participant number
IRS (Internal Revenue Service) IRS (Internal Revenue Service)	an agency of the U.S. government responsible for collecting taxes and enforcing tax laws
issue date (awards) issue date (awards)	the date the award was given to you by your company; also known as grant date
issuer (stock options) issuer (stock options)	the company that grants stock options to you

 J

(No entries)

 K

(No entries)

 L

lapse of restrictions lapse of restrictions	generally means that you have met all your company’s requirements, usually time based, to exercise your award/receive your shares; also known as vesting
limit order limit order	you choose the maximum price per share you are willing to buy or the minimum price you are willing to sell; this type of order guarantees the price you choose, but does not guarantee the order will be fulfilled, or executed
lockup lockup	a period of time after a company goes public when insiders are restricted from selling their shares; newly public companies routinely require people with a large number of shares, such as directors, executive officers, and all employees holding stock awards, not to sell stock during this time, effectively “locking up” those shares
look-back look-back	a provision that looks at the price at the beginning of the offering period and at the end of the offering period, and applies whichever is lower to help determine the purchase price

 M

market market	a place where shares of company stock are bought and sold by the public; also known as stock exchange and stock market
market order market order	buying or selling shares at the next available price when the market is open; a quick way to place a buy or sell order; guarantees the order will be fulfilled, or executed, but does not guarantee the price
market price market price	the price of a single share of your company's stock at a single point in time
matching contribution (ESPP) matching contribution (ESPP)	the amount of shares your company purchases on your behalf, in addition to any shares purchased with your ESPP contributions
material nonpublic information (MNPI) material nonpublic information (MNPI)	information is generally considered to be material if a reasonable investor would consider the information important in making an investment decision; information may also be material if it is likely that the price of a security would change if the information were made public; information is nonpublic if it is not generally available to the public in a widely used medium

 N

net value (stock options) net value (stock options)	the amount your stock options are in the money; the value of your grants prior to taxes
nonpublic nonpublic	a company whose shares are individually owned and have never been offered publicly for purchase or sale on a stock exchange; also known as private company and privately held company
nonqualified stock option (NSO) nonqualified stock option (NSO)	a stock option is an opportunity your company gives you to purchase a certain number of your company’s shares at a fixed price (the grant price) within a specific period of time NSOs do not meet IRS requirements that give you special tax treatment; this means that you are taxed when you exercise the stock options; you pay ordinary income taxes on the difference between the grant price and the fair market value at the time you take action (exercise), or the net value

 O

offering period offering period	the time period when your company collects after-tax payroll deductions and holds the money until it is time to purchase your shares; the number of offering periods during the year depends on your company plan; be sure to check your plan rules for more details
option agreement option agreement	a document issued by your company outlining the terms and rules for your new grant; a contract between you and your company and must be reviewed and accepted
optionee optionee	anyone who receives and still holds stock options
out of the money out of the money	when the current market price of your company stock is below your stock option grant price; also known as underwater

 P

participant participant	an eligible employee who is taking part in an employer-provided equity compensation plan
participant number participant number	a number created for you by Fidelity to access your Stock Plan Account; this number is unique to you and helps keep your information safe and identify you as the owner of the account; also known as i-Number
performance award plan performance award plan	a grant of company shares or units that are contingent on achieving the performance goals established by your company; details for these awards vary; be sure to check your plan documents for your plan rules
plan document plan document	a document issued by your company that provides a description of your plan rules and how the plan works
prior business day's close prior business day's close	one of the ways a company determines the fair market value of your award at the time of exercise or vesting; it means that your plan uses the closing price of your company stock from the previous day to calculate the following: - taxable gain - withholding taxes for nonqualified stock options (NSOs) - alternative minimum tax (AMT) for incentive stock options (ISOs)
private company private company	a company whose shares are individually owned and have never been offered publicly for purchase or sale on a stock exchange; also known as nonpublic and privately held company
privately held company privately held company	a company whose shares are individually owned and have never been offered publicly for purchase or sale on a stock exchange; also known as nonpublic and privately held company
public company public company	a company that sells shares to the general public, usually as part of an initial public offering (IPO) and then on a stock exchange; anyone can buy or sell shares of that company; each share represents a unit of ownership that gives you the right to vote on company matters and receive dividends, if applicable
purchase date purchase date	a company-determined date when your company takes all the money you have contributed and buys as many company shares as possible, sometimes at a discount; be sure to check your plan documents for company rules
purchase price purchase price	the cost to buy your company's stock through the employee stock purchase plan (ESPP) on the purchase date; your contributions will be used to buy company stock at this price, sometimes at a discount; be sure to check your plan documents for company rules

 Q

qualifying disposition qualifying disposition	the sale, transfer, or exchange of stock that happens after meeting the IRS-mandated time frame of more than two years after the stock was granted and more than one year after it was acquired

 R

real-time price real-time price	one of the ways a company determines the fair market value of your award at the time of exercise or vesting; it means that your plan uses the market price for the stock at the time your exercise order executes to calculate the following: - taxable gain - withholding taxes for nonqualified stock options (NSOs) - alternative minimum tax (AMT) for incentive stock options (ISOs)
restricted stock award (RSA) restricted stock award (RSA)	an award of company stock that allows you to take action only after the award vests (also known as lapse in restrictions); once the shares vest, they are deposited into your Stock Plan Account and are yours to hold, sell, or transfer
restricted stock unit (RSU) restricted stock unit (RSU)	an award that is a promise to pay cash or stock or both and allows you to take action only after the award vests; once the award vests, your company gives you shares or the cash equivalent

 S

sale availability date sale availability date	the first date you can sell or exercise; the timing varies depending on your plan; be sure to check your plan rules for more details
share share	a unit of ownership in a company; also known as stock
shareholders shareholders	any person who owns shares of a company’s stock
stock stock	a unit of ownership in a company; also known as share
stock appreciation right (SAR) stock appreciation right (SAR)	an award that lets you benefit from any rise in your company's stock price from the grant date; you do not receive the value of the underlying shares, only the increase in the value of the shares from the grant date; you do not receive stock dividends or voting rights
stock exchange stock exchange	a place where shares of company stock are bought and sold by the public; also known as stock market and market
stock market stock market	a place where shares of company stock are bought and sold by the public; also known as stock exchange and market
stock option stock option	a stock option is an opportunity your company gives you to purchase a certain number of shares of your company’s stock at a fixed price (the grant price) within a specific period of time
stock option netting stock option netting	a method for taking action on your stock option using shares from your option to cover the purchase of your company stock at your fixed price (the grant price); if you choose this method, your company withholds shares so that you do not have to sell shares to cover the cost, required tax withholding, and fees; you keep the rest of your shares, which are deposited into your Stock Plan Account; also known as exercise and net
Stock Plan Account Stock Plan Account	works alongside your company’s stock plan to hold your shares and cash
stock swap stock swap	a form of stock option exercise where you exchange shares you currently own to pay the exercise costs instead of cash

 T

tax-qualified ESPP contribution limit tax-qualified ESPP contribution limit	the maximum contribution amount the IRS allows for a tax-qualified section 423 employee stock purchase plan (ESPP) in a calendar year; this limit is based on your company’s undiscounted stock price when the offering begins, not the price on the day you purchase; your company’s ESPP contribution limit may differ from this IRS $25,000 limit; any contributions that exceed this amount are refunded back to you; be sure to check your plan’s rules
today's close today's close	one of the ways a company determines the fair market value of your award at the time of exercise or vesting; it means that your plan uses the price for the stock as of the market close on the day your stock option exercise order executes to calculate the following: - taxable gain - withholding taxes for nonqualified stock options (NSOs) - alternative minimum tax (AMT) for incentive stock options (ISOs)
trading restriction trading restriction	a time frame determined by your company when you are restricted from exercising or selling your shares; be sure to check your plan rules for more details
transfer availability date transfer availability date	the first date you can transfer your shares; the timing varies depending on your plan; be sure to check your plan rules for more details

 U

underwater underwater	when the current market price of your company stock is below your stock option grant price; also known as out of the money

 V

value value	over time your awards could potentially accrue worth, which is calculated as the current stock price multiplied by the amount granted before taxes
vesting vesting	when your stock plan award vests, you become the legal owner of the shares or cash granted in the award; occurs after a certain period of time has elapsed, or when a performance target has been met, or both
vesting period vesting period	how much of your award becomes available to you over periods of time; this applies to both stock options and restricted stock; also known as vesting schedule
vesting schedule vesting schedule	how much of your award becomes available over periods of time; this applies to both stock options and restricted stock; also known as vesting period

 W

withholding tax withholding tax	generally, the same types of taxes withheld from your compensation

 X

(No entries)

 Y

(No entries)

 Z

(No entries)

0 - 9

144 (SEC Rule) 144 (SEC Rule)	refers to SEC Rule 144, which is a means by which restricted and control securities may be sold in compliance with U.S. federal law and regulations; Rule 144 requirements depend on who owns the security, the length of time it has been owned, and how it was acquired. Rule 144 applies to the resale of restricted securities as well as to restricted and nonrestricted securities sold by control persons; to sell the security, some or all of these requirements must be met: - the issuer must be in compliance with SEC reporting requirements - a holding period of one year must be met by the shareholder; however, a control person may sell unrestricted securities without regard to the holding period; volume restrictions still apply - the amount of stock sold in any three-month period cannot exceed the volume limitations, which are the greater of 1% of the outstanding shares or the average weekly trading volume for the four calendar weeks preceding the filing of a Form 144 notice; a Form 144 notice must be filed in certain transactions - the stock must be sold in a broker's transaction or a transaction with a market maker; solicitation of purchasers is prohibited
144K 144K	securities have this restriction if the securities are restricted but the stock owner is not an affiliate of the company, and the securities were acquired from the company or an affiliate of the company more than two years ago; participants can sell this type of stock without having to satisfy most of the requirements of Rule 144
145 145	sets forth conditions for selling securities that are the result of an SEC-registered merger or consolidation; non-affiliates are not subject to resale restrictions; affiliates of the selling company who do not become affiliates of the acquiring company are subject to volume restrictions and public information requirements for the first year, but do not have to file Form 144; during the second year, the only requirement is for the company to be current in all SEC reporting; affiliates of the acquiring company must abide by all Rule 144 requirements except the minimum holding period
701(g)(3) 701(g)(3)	rule permitting the sale of unregistered securities in the open market, provided that the shares were issued under a company benefit plan or compensation agreement prior to a company going public; an owner of these securities who is not considered an affiliate of the issuer may sell shares under Rule 701(g)(3) without having to satisfy Rule 144 requirements; the shares cannot be sold until 90 days after the company goes public; however, certain Rule 701 paperwork needs to be completed by the stock owner in order to have the restricted legend removed and to release proceeds from the sale; affiliates must satisfy all the requirements of Rule 144, other than the one-year holding period