4 ms·

Is your company publicly traded? The OP is referring to issues when the stock is illiquid.

• umanwizard 9y ago
  Yes it is publicly traded. So, how does it work with privately traded companies. Talking about RSUs, not options. What is the difference between "release of the underlying shares" and "vest" ?
  • seattle_spring 9y ago
    The proposal is that the employee will have to pay tax on RSUs upon vest, even though the underlying assets cannot be sold. For example: Employee A has 40,000 shares of stock granted upon hire, vesting 25% per year. So on year 1, they vest and have to pay taxes on 10,000 shares. Say those shares are valued at $25 per share. In a public company, you could just sell $25 of those shares and be left with 7,500 shares. At the private company, under the new rules, you'll have 10,000 shares that you cannot sell, but still be liable for paying tax on $250,000. Those shares may never be liquid, and this rule can and will bankrupt people.
  • kelnos 9y ago
    It currently works no differently with private companies. It's a common misconception that RSUs are taxed when they vest; they're actually taxed at delivery/release, which need not be the same as the vest date. At a public company there's no reason to make those two dates different (unless you're subject to trading restrictions and the vest dates are during blackout periods). At a private company your RSUs can vest but not be delivered/released until later.