guide to understanding employee restricted...
TRANSCRIPT
CERTAINTY INGENUITY ADVANTAGE
Guide to Understanding Employee Restricted Stock
1 > Guide to Understanding Employee Restricted Stock
Introduction to Employee Restricted Stock ������������������������������������������������������������������������������������������������� 2
An Opportunity for Reward with Limited Risk ���������������������������������������������������������������������������������������������������� 2
How does Restricted Stock Work? ���������������������������������������������������������������������������������������������������������������������������� 2
Preparing for your Restricted Stock Vesting����������������������������������������������������������������������������������������������� 3
Tax Election Methods ������������������������������������������������������������������������������������������������������������������������������������������������������ 3
Payroll Withholding ���������������������������������������������������������������������������������������������������������������������������������������������������� 3
Cash ���������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 3
Withhold Shares ���������������������������������������������������������������������������������������������������������������������������������������������������������� 3
Selling Enough ������������������������������������������������������������������������������������������������������������������������������������������������������������� 3
Taxation of Restricted Stock ���������������������������������������������������������������������������������������������������������������������������������������� 3
Receiving Your Net Proceeds �������������������������������������������������������������������������������������������������������������������������������������� 3
Direct Deposit ��������������������������������������������������������������������������������������������������������������������������������������������������������������� 3
Wire Transfers �������������������������������������������������������������������������������������������������������������������������������������������������������������� 3
Check �������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 3
Required Forms ������������������������������������������������������������������������������������������������������������������������������������������������������������������ 4
Accessing and Managing your Account ����������������������������������������������������������������������������������������������������������������� 4
Glossary ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 5
Contents
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Restricted stock is often an important element in a company’s
compensation package and is usually intended as both a reward
and an incentive� Companies grant restricted stock to their
employees to promote a sense of ownership, recognize individual
contributions and encourage a focus on the company’s long
term success�
An OPPORtunIty fOR REwARd wIth LImItEd RISk
When you are granted restricted stock, you become a
shareowner; however, the stock that you hold will have
restrictions that can prevent you from selling it until certain
criteria are met� Restricted stock typically provides voting rights
and dividend payments to grantees prior to lapse� Once the grant
lapses, restrictions will typically be lifted, granting you the right to
sell or transfer the stock and other benefits of stock ownership�
hOw dOES REStRIctEd StOck wORk?
Generally restricted stock is subject to a service-based vesting
period� This means that you may need to work for the company
for a period of time before the restrictions are lifted� This could
be a cliff vesting in which 100% vests at one time at the end of
the period (ie; 3 years)� Another example is a graded vesting
over a period of time such as 5 years whereby 20% will become
vested on the anniversary each year� Restricted stock can also
be subject to performance-based vesting� This means that the
restricted stock vests when a specific performance criterion is
met within a specific time frame�
Introduction to Employee Restricted Stock
3 > Guide to Understanding Employee Restricted Stock
tAx ELEctIOn mEthOdS
Prior to the vesting of your restricted stock, you must decide
which tax payment method you wish to use� Please note: In
accordance with the plan rules and local laws, certain methods
may not be available�
Payroll withholding
This tax payment method advises your company to withhold
funds from your paycheck to cover the required tax withholding
and applicable brokerage commission and fees� You will receive
your proceeds as shares of stock�
cash
This tax payment method allows you to provide cash to cover
the required tax withholding� You will receive the full number of
shares that vest�
withhold Shares
This tax payment method allows your company to withhold
shares from your grant to cover the taxes due� Your company
will pay the taxes due to the IRS� You will receive your proceeds
in shares less the number of shares withheld to cover the taxes
due�
Selling Enough
This tax payment method will sell enough shares from your grant
to cover the taxes� You will receive your proceeds in shares, less
the number of shares sold to cover the taxes due� Any sale of
shares will result in the issuance of a 1099B at year end�
Note: Some plans allow for the immediate sale of all shares
whereby the taxes due are netted from the gross proceeds of
sale and the participant receives cash� See the various cash
disbursement methods that may be allowed by your plan�
Preparing for your Restricted Stock Vesting
tAxAtIOn Of REStRIctEd StOck
When restricted stock vests; taxes are due immediately�
You can model the different methods allowed by your
company within your Computershare account at
www�computershare�com/employee/us� You may be required
to make an election if your company offers more than one tax
election method�
REcEIVInG yOuR nEt PROcEEdS (If thE SALE Of ALL ShARES IS AVAILAbLE)
Your net proceeds will be distributed via the method that
you selected at the time of the restricted stock lapse or in
accordance with your instructions on file� Following are the
options from which you may choose:
direct deposit
You are able to set up direct deposit instructions to transfer
cash proceeds online via the Employee Online website at
www� computershare�com/employee/us�
wire transfers
You are able to set up wire instructions to transfer cash
proceeds online via the Employee Online website at
www�computershare�com/employee/us� Wire transfers may be
subject to a fee, depending on your company’s plan� See your
plan document for details�
check
The default method to receive proceeds is by a check�
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REquIREd fORmS
The IRS requires that you certify your tax status by
completing Form W-9 or Form W-8BEN� You can certify
your tax status via the Employee Online website at
www�computershare�com/employee/us or by calling the
communications center to have a copy of the appropriate
form mailed to the address on record with Computershare� If
you do not certify your tax status, your net proceeds will be
subject to the Internal Revenue Service’s (IRS) mandated 28%
withholding tax� Please note: Form W-9 does not expire� Form
W-8BEN expires on December 31, three years after the year that
you certify�
AccESSInG And mAnAGInG yOuR AccOunt
Log in to your account at www�computershare�com/employee/us
to view, manage and transact on your account� You can also
call the Computershare communications center at the number
listed on your plan correspondence� The Computershare
communications center is available from 3:00 a�m� - 9:00
p�m� ET� The same phone number may be used to access the
Computershare Interactive Voice Response (IVR) system�
5 > Guide to Understanding Employee Restricted Stock
Glossary
Capital Gain – The profit that results from the sale of an asset,
such as a stock�
Common Stock – A security that represents units of ownership
of a public company� An owner of common stock would typically
be entitled to proxy votes and any dividend payments made by
the company�
Dividend – A distribution to shareholders that represents
participation in the company’s profits and earning� Dividends
may be paid in either stock or cash�
Fair Market Value – The price at which a company’s stock can be
bought or sold in the open market at a given time�
Grant Date – The date that restricted stock is “granted” or
issued� This date is often used as a starting point for other
relative dates such as vesting�
Vested – Restricted stock that has met certain time and/or
performance requirements and will typically have sell restrictions
removed�
Vesting Date – The earliest date that your restricted stock will
have restrictions removed�
W-8BEN – Certificate of Foreign Status form required by the IRS
to tell the payer, transfer agent, broker or other middleman that
an employee is a nonresident alien or foreign entity that is not
subject to US tax reporting or backup withholding rules�
W-9 – A form that is required by the IRS for US taxpayers and
citizens to certify their Social Security number or Taxpayer
Identification Number� If form W-9 is not completed, sales of
stock may be subject to applicable backup withholding tax�
Please note: The information contained herein is not investment
advice or tax advice, but only a general overview of restricted
stock. Computershare does not provide tax or legal advice,
make any recommendations as to whether and when you should
dispose of your stock, or advise which tax payment election is
best for you. We suggest that you consult with your own tax
and/or investment advisor about these matters, as well as the
personal tax consequences of your restricted stock grant and the
sale of your shares.
Computershare does not provide tax or legal advice� Please consult your tax and/or legal advisor for such guidance�©2014 Computershare Inc� All rights reserved� Participant_Guide_RS_082114
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