Restricted stock awards are a type of equity compensation given to employees of a company. The shares are restricted, meaning that the employee cannot sell or transfer the shares until certain conditions are met, such as a vesting schedule or performance milestones. Stock options, on the other hand, give the holder the right to purchase shares of the company at a fixed price, known as the exercise price.
The tax implications of restricted stock awards depend on whether the stock is vested or unvested. Unvested stock is considered compensation income, and is subject to federal and state income taxes, as well as employment taxes. Vested stock is considered capital gains or losses, and is subject to capital gains taxes when the stock is sold.
The rules for what happens to restricted stock awards when an employee leaves a company vary depending on the terms of the stock plan and the specific awards that were granted. In some cases, the awards may be forfeited, while in others they may be vested and transferred to the employee. It's important to check the specific plan details and consult your financial advisor to understand the specifics of the plan.
The value of restricted stock awards can be determined by the fair market value of the company's stock at the time the awards were granted. However, the value may fluctuate based on the company's performance, market conditions and other factors. It's important to consult your financial advisor to get a better understanding of the value of your restricted stock awards.
The process of selling restricted stock awards will depend on the specific terms of the awards and the stock plan. In some cases, the shares may be sold on the open market once they vest, while in others they may be sold only to certain buyers, such as the company or other employees. It's important to check the specific plan details and consult your financial advisor to understand the specifics of the plan.