Admin and Contractual Flashcards
A company has traditionally awarded stock options to its employes, but it is considering switching to restricted stock. The company has asked you to provide it with some benefits of using restricted stock. Which of the following statements is true?
Restricted stock does not necessarily lead to an accouting expense under ASC718.
An employee has participated in a company’s Section 423 ESPP since the inception of the plan six years earlier. Now, she is leaving the company one month before the next purchase date. The company should:
review the plan document to determine if she is allowed to purchase shares.
A company incorporated in a state that requires recipients of stock to pay at least par value for the shares begins issuing restricted stock awards. Which of the following would be acceptable?
Counting past service to the company as payment for everyone except new hires
Which of the following is true upon the exercise of an ISO?
The company must send a written confirmation of exercise to the optionee.
Which of the following would not require the approval of a publicly traded company’s shareholders?
The company grants options to a newly hired employee with compensation committee approval.
Access to a company’s equity compensation database should be granted by:
the IT department.
A privately held company offers restricted stock to an employee. Which of the following is most likely true?
He will pay the fair market value upon accepting the award.
A public company registers shares for its employee stock option plan on a Form S-8. According to the plan, 2 million shares are available for grant, with a provision for an additional 100,000 shares to be added to the pool of shares on the first day of each fiscal year for the next five years, assuming the plan is not terminated sooner. In order to be sure all the shares are freely salable, the company must:
Register 2 million shares on its initial S-8, and annually amend the S-8 for 100,000 shares.
Evergreen provisions automatically:
increase the number of shares reserved in a company’s stock plans.
Which of the following is a characteristic of NSOs?
The exercise price can be below FMV.
Which of the following is true of a net exercise?
Shares can be net of option cost and taxes.
An employee wants to exercise an NSO. He places a same-day sale transaction through the company’s captive broker. Which of the following is true?
The cash purchase price for the shares will be paid with proceeds from the sale of the purchased shares.
A publicly traded company is planning to grant stock options to a broad range of employees, including factory workers who do not have access to computers during their normal course of business. The shares issued under the plan are registered on a Form S-8. Which of the following is true?
The company can post the prospectus on the company intranet, but must also make paper versions available to the factory workers.
