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A restricted stock award (RSA) is a form of equity compensation used in stock compensation programs. There are two types of restricted stock awards: restricted stock award shares and restricted stock award units.
An RSA share is a grant of company stock in which the recipient's rights in the stock are restricted until the shares vest (also known as "lapse in restrictions"). This period of restrictions is called a vesting period.
An RSA unit is a grant valued in terms of company stock, but the company stock is not issued at the time of the grant. Once a recipient of an RSA unit satisfies the vesting requirement, the company distributes shares or cash equivalent to the number of shares used to value the unit.
Once you are granted a restricted stock award, you must decide whether to accept or decline the award. If you accept the award, you may be required to pay your employer a purchase price for the award.
After accepting an award and providing payment (if applicable), you must wait until the award vests. When the award vests, you receive the shares of company stock or the cash equivalent (depending on your company's plan rules) without restriction.
A restricted stock award is a form of equity compensation that is subject to a contract (grant agreement) that restricts the recipient's rights according to the rules of the equity compensation plan. Control and restricted stock involves unregistered shares of stock that are restricted by SEC Rule 144.
There are usually special rules in the event you retire, die or become disabled. See your employer's plan rules for details.
Vesting requirements may be 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 shares are typically forfeited to the company. Vesting may occur prior to 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 the holding period has been met, the shares or cash equivalent (depending on your company's plan rules) of company stock are automatically deposited into your Stock Plan Account. Once the shares have vested, you own them outright, and may hold, sell, or otherwise dispose of them without risk of forfeiture. If your award is paid in cash, you may use the cash as you would any other cash in your Stock Plan Account.
If you leave your employer prior to the date your restricted stock awards vest, typically you forfeit your awards. Check your company's plan for details.
The Summary page for restricted stock awards displays information about grant totals, unaccepted grants, and accepted grants. From this page, you can view detailed information about a particular RSA, accept or decline unaccepted RSAs, or select a tax withholding method which will take effect at vesting for an accepted RSA.
You can view vesting schedule information, grant details, and the grant's current estimated value.
The total value of unvested awards is equal to the previous day's closing price of the stock times the number of unvested awards, but not including unaccepted awards. Note that this value is not the same as the fair market value of your unvested awards.
The fair market value is the value of the shares at the time they vest and the proceeds are delivered to you. Fair market value is specified in your RSA agreement, and is used to determine the amount of income treated as compensation for federal income tax purposes. Your company's RSA plan rules determine the how fair market value is calculated for your RSAs. 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 divided by the number of RSA shares or units you own.
The expiration date is the date on which your 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 is possible. For these plans, if vesting has not occurred by the expiration date, the grant 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 or View Grant Agreement. You can also view your plan document and grant agreement when you accept or decline an unaccepted grant.
The plan document and grant agreement are in PDF format. You must have the free Acrobat® Reader® to view and print the plan document.
You can view a history of all transactions for your restricted stock award plan for the past 10, 30, 60, 90, or 120 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, if applicable.
On the Unvested Grants page, you can view the vesting date, grant date, grant ID, number of shares, and tax withholding method for each unvested grant. You can also view an award's estimated value upon vesting, and an estimate of the taxes you may owe upon vesting. You can elect a tax withholding method for each RSA still requiring a tax withholding election.
The View Details page for an unvested grant also shows you the estimated fair market value per share, 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, you are not taxed at the time of a restricted stock award. Instead, you are taxed at vesting, when the restrictions lapse. The amount of income subject to tax is the difference between the fair market value of the award at the time of vesting minus the amount paid for the award, if any.
For awards that pay in actual shares, your holding period begins at the time of vesting, and your 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 you hold the shares as a capital asset, you would recognize capital gain income (or loss); whether such capital gain would be a short- or long-term gain would depend on the time between the beginning of the holding period at vesting and the date of the subsequent sale. Consult your tax adviser regarding the income tax consequences to you.
A default election, decided by your company, will be made for you if you have not made an election 15 days prior to vesting. You can change your tax withholding method election up to seven days prior to vesting.
Depending on plan rules, you have three options to meet your tax withholding obligation due at vesting:
Say that Mike has 250 shares of restricted stock vesting on January 1, 2004. Assume the stock price on January 1 is $10 per share and the tax withholding obligation is $725.
Tax withholding is calculated based on the total fair market value of your awards on the grant date (less the amount you paid for the shares, if any) multiplied by the tax withholding rate supplied by your company. You must have funds available in your Stock Plan Account to satisfy the withholding obligation. The withholding will be sent to your employer for tax payment.
Click Estimate Gain to estimate your tax withholding obligation. Enter your grant data to estimate taxable income and tax withholding on vesting.