Understanding the Release of Restricted Shares
This section lists prerequisites and common elements and provides an overview release administration.
Before you begin releasing restricted shares:
Grant options or awards that allow exercise before vesting, such as restricted stock awards.
Exercise unvested shares.
Field or Control |
Description |
|---|---|
83b Election |
Selected if the optionee filed an IRC 83(b) tax election. |
Employee Information |
This group box displays employee information as of the release date. |
EmplID |
Click to access the Employee Information page to view employee information. |
Release Number |
Displays NEW when you enter a release. When you save, the system generates a sequential release number from the last release number stored in the Stock Table. |
Stock options that are exercised before they are vested are commonly called restricted shares and are typically held in escrow until they vest. As the shares vest, they are released to the optionee. You must record the number of shares released and the taxes due from the optionee, release the shares from escrow, and deliver them according to the optionee's instructions. Ordinary income and taxes are generally calculated and collected at the time of release unless the optionee filed an 83(b) election at the time of exercise.
If your stock plans include restricted stock awards, or the plans allow exercise before vesting, you periodically release restricted shares.
The process of releasing restricted shares is similar to that of exercising options. You identify the releasable shares, the release method, and the issuance instructions. Depending on the optionee's 83(b) election, you calculate ordinary income and collect taxes.