T1M1-Equity Comp Flashcards
Grant date
Employee receives award
Vesting date
Right to exercise award
Exercise date
Purchase date of stock options or SARS
Sale date
Sells restricted stock or stock acquired using stock options
Expiration date
Rights for equity reward lapses
Nonstat stock options: taxable event
Readily determinable value: grant date
No determinable value: exercise date
Define readily determinable value
- Traded in established market
- ## TENF
What is TENF
Option is:
Transferable
Exercises immediately in full
No effect on value
FV is readily determined
2 types of statutory stock options
- Incentive stock options (ISO)
- Employee stock purchase plan (ESPP)
What is ISO
Gives employee right to buy company stock at a discount
Key points of ISO
-granted under written plan document
-may not own more than 10% as of grant date
-.remain employee from grant date until 3 months (1 yr if due to disability) before exercise date
-exercisable within 10 yrs of grant date
excercise price no less than FMV of stock at grant date
How long stock held after exercise date?
-at least 2 years after grant date AND
-at least one year after exercise date
What is $ limit on how much ISOs and ESPP can be exercised in a year
$100,000
What is ESPP
Employees purchase company stock at discounted price thru payroll deductions
Key points of ESPP
-written plan
-can’t grant if 5% or more voting power
-Available to full-time employees excluding the highly compensated and those with less than 2 years employment
-option exercise price no less than 85% of FMV of stock when granted or exercised
-option can’t be exercised more than 27 months after grant date
-Must remain employee from grant date until 3 months before option is exercised
