Restricted Share Unit Agreement
Since you legally own RSA shares when they are granted to you, the acquisition only affects whether the company can buy back your shares if you leave or if you are fired. Most companies have acquisition schedules in place to prevent individuals from joining a company, receiving their RSA award, and leaving immediately. Dividends excluding shares. If the Company declares and pays a dividend or distribution on common shares in the form of non-share ownership, you will be credited with a certain number of additional SRUs on the date of payment of such dividend or distribution equal to the number of ARI corresponding to you on the date of registration of such dividend or distribution multiplied by the fair market value of such real estate actually paid as dividend. or distribution to each outstanding common share The date on which you actually receive your RSU shares may be an acquisition date, a liquidation event, a specific date in the future or a combination of these. This future date will be set when the RSU is granted. Another important difference from an RSA is that the holder of the RSU pays nothing to own the shares (except for applicable taxes). Acquisition means you have to earn your shares over time. The number of your SRUs and other related terms will be adjusted appropriately to avoid the dilution or expansion of your rights with respect to SRUs to reflect changes in outstanding common shares resulting from an event referred to in paragraph 11(c) of the Plan or any other “share restructuring” within the meaning of FAS 123R. taking into account any UAR credited to you in connection with such an event in accordance with Section 5(a).
As a result, the median number of stock options granted per company by Fortune 1000 companies decreased by 40% between 2003 and 2005, while the median number of restricted stock allocations increased by nearly 41% over the same period. (a) the delegation to the participant of tasks which entail much less power and responsibility for the participant and which are materially incompatible with the position, authority or responsibility of the participant immediately before the first occurrence of (i) the change of control, (ii) the date of execution of the initial written agreement or instrument providing for the change of control; by the Company or (iii) the date of adoption by the Board of Directors of a resolution providing for the change of control; Any taxable profit between the date of grant and acquisition is subject to ordinary income tax. Once the shares are acquired, Sean owns them. Currently, any subsequent profit between the acquisition and sale is subject to capital gains tax. Administrative costs are minimal for employers because there are no real actions to track and record. ARUs also allow a company to defer the issuance of shares until the acquisition schedule is complete, which helps delay the dilution of its shares. If any portion of the ARI is acquired during the twelve-month period immediately preceding a violation of Section 3(a) above (or after the date of such violation), you must promptly provide the Party with a certificate or certificates for the Company`s common shares153 acquired under the settlement of such ARI (or an equivalent number of other shares) at the Company`s request.153 Unlike SARs, an RSU is a promise by the company to give shares to an employee at a later date if the shares are “held” by the employee at the time of grant. time; or (5) the Participant has breached any material provision of any confidentiality, assignment of invention, non-compete agreement or similar agreement between the Participant and the Company and, if redress is possible, has failed to remedy such breach with reasonable notice from the Company; or (b) the participant`s condemnation or submission of an admission of guilt or non-pretense by the participant of a crime involving moral distortion or a crime. RSU shares are not issued to the recipient until they have been acquired. When a company grants UGRs, it promises to issue those shares at a later date based on the acquisition schedule. .
If the Company declares and pays a dividend or distribution on common shares in the form of cash, you will be credited with an amount equal to the number of SRUs credited to you on the date of registration of such dividend or distribution at the time of payment of such dividend or distribution, multiplied by the amount that would have been paid as a dividend or distribution for each common share in circulation. on that payment date. All amounts credited under this Section 5(a)(i) are subject to the restrictions and conditions applicable to the RSU for which the amounts are credited and are payable when the underlying RSU becomes due. At the time the underlying RKU matures, it is at the Company`s discretion to pay the accumulated dividend equivalents in cash or common shares. If the underlying RKU is not acquired or forfeited, any amount credited in accordance with this Section 5(a)(i) with respect to the underlying RKU will also not be acquired and forfeited. The employee “owns” the shares associated with RSA at the time of the award, but may still need to purchase them, depending on the nature of the offer. This purchase contingency is the reason why RSA is considered “restricted”. As a concrete example of what a company does to issue RSUs, take a look at the December 2017 SEC Form 4 filed by electric vehicle company Tesla, Inc.
(NASDAQ: TSLA). This form shows that Eric Branderiz – the company`s former accounting director – who received restricted shares wanted to convert 4,808 units of restricted shares into common shares. The company`s shares are worth $10 per share, which could earn the UAR an additional $10,000. To encourage Madeline to stay in the company and receive the 1,000 shares, she is betting on a five-year acquisition schedule. After one year of employment, Madeline receives 200 shares; after two years, he receives another 200 and so on until he acquires the 1,000 shares at the end of the lock-up period. Depending on the performance of the company`s shares, Madeline may receive more or less than $10,000. UARs do not offer dividends because actual shares are not allocated. However, an employer may pay dividend equivalents, which can be transferred to an escrow account to offset withholding taxes, or reinvested by purchasing additional shares.
The taxation of restricted holdings is governed by Section 1244 of the Internal Revenue Code. Restricted shares are very different from a stock option. A stock option gives you the right to buy a certain number of shares at a fixed price, but you do not own the shares until you buy them. For restricted shares, you hold the shares from the day they are issued. Shares on that payment date, divided by the fair value of one share on that payment date. All SRUs credited to you under this Section 5(a)(ii) are subject to the restrictions and conditions applicable to the UAR for which the ARI are credited and are payable when the underlying UAR becomes due. If the underlying UAR is not acquired or forfeited, any UAR credited in accordance with this Section 5(a)(ii) with respect to the underlying UAR will also not be acquired and forfeited. You are entitled to dividend equivalents for all SRUs credited to you in accordance with this Section 5(a)(ii). OARs have no voting rights until the actual shares are issued to an employee at the time of the acquisition. If an employee leaves before completing their acquisition schedule, they lose the remaining shares to the company. For example, if John`s acquisition schedule consists of 5,000 UAR over two years and he resigns after 12 months, he loses 2,500 UAR.
(For more information, see “How Restricted Shares and Restricted Share Units (UGRs) Are Taxed.”) Take any action that could divert the attention of the Company or any of its affiliates, successors or assigns (the “Related Parties”) in connection with current or future business activities or related parties; is subject to paragraph 11(k) of the Plan, including, where applicable, the six-month time limit rule set out in sections 11(k)(i)(D) and (E) of the Plan. (Note: This rule may apply to any portion of the SRUs that is acquired after your retirement date under the plan, and may also apply in other cases.) .
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