Section 10(b) of the Exchange Act of 1934, 15 U.S.C. § 78j(b), makes it unlawful “for any person . . . [t]o use or employ, in connection with the purchase or sale of any security . . . any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission […]
Category: Stock Options
What is a lock-up period?
Lockup agreements prohibit company insiders—including employees, their friends and family, and venture capitalists—from selling their shares for a set period of time. In other words, the shares are “locked up.” Before a company goes public, the company and its underwriter typically enter into a lockup agreement to ensure that shares owned by these insiders don’t […]
What’s an RSU?
Restricted Stock Units are unsecured, unfunded promises to pay cash or stock in the future and are considered nonqualified deferred compensation subject to IRC §§ 3121(v)(2), 451 and 409A. Typically, one Restricted Stock Unit represents one share of actual stock. Restricted Stock Units generally are not taxable at grant if they meet the requirements of, […]
What are SARs?
Stock Appreciation Rights are a method of compensating employees or independent contractors. A Stock Appreciation Right (SAR) is an arrangement, during a specified period, which the employee has the right to receive the increased value of the employer’s stock by cashing out or exercising the SAR. The employee can only benefit from the appreciation in […]
What is phantom stock?
A Phantom Stock Plan is an arrangement under which deferred amounts are determined by a reference to hypothetical “phantom” shares of the employer’s stock without ever issuing the actual shares to the employee. Depending on the terms of the arrangement, the employee may be entitled to receive only the growth in the value of the […]
ISO or NSO?
If you receive an option to buy stock as payment for your services, you may have income when you receive the option, when you exercise the option, or when you dispose of the option or stock received when you exercise the option. There are two types of stock options: Options granted under an employee stock […]