Performance share grants, whose vesting is based not on time but on the achievement of specified performance goals, align the motivations of employees with the competitive interests of the company and its shareholders. Amid the rising popularity of performance shares, well beyond just executive compensation, we have crafted an informative set of content on all aspects of performance shares.
We've also been getting a lot of questions about performance share grants. While performance share plans are extremely variable in their features and terminology, they all have basic common elements that you should understand, whether your grant's performance goals are a sprint, a mile, or a marathon.
To help our website users get the most of a performance-based equity award, and avoid costly mistakes, we have compiled the top 10 questions to ask about these types of grants. The links in the questions below go to the related content at myStockOptions.com.
1. How do performance share grants differ from normal time-based restricted stock and RSUs?
2. What are the performance goals and metrics as stated in your company's plan? Are the measures relative to other companies in the same industry or to a market index?
3. What is the performance period during which the goal must be reached? How soon after the end of the period will I receive the shares?
4. Is there a sliding scale for share payout? Are there minimum, maximum, and target-level payouts? If so, what are they?
5. Is there an additional holding period on the shares I receive after they are paid out?
6. What would happen to your performance share grant if you were to lose your job, retire, become disabled, or die?
7. How does tax withholding work upon share payout?
8. Is there an election to defer the delivery of the shares (and the taxes) beyond the normal time of share payout?
9. Do I get dividends with performance share awards?
10. What happens to my performance share grant if my company is acquired?
In addition, you should understand the tax treatment, the reporting on your Form W-2, and the related tax return reporting. The Tax Center at myStockOptions.com covers all tax topics involving stock compensation.
Visit myStockOptions At NASPP 2018: Exhibit Hall And Financial-Planning Session
We are excited about the NASPP's annual conference, being held this year in San Diego (Sept 25-28). As always, myStockOptions.com will have its cheerful booth in the exhibit hall, where our editor-in-chief Bruce Brumberg will be available as an NASPP-designated expert to answer questions on stock plan education/communications and equity comp taxation. If you attend the conference, please stop by our exhibit booth for a chat and pick up a myStockOptions.com souvenir!
In addition, Bruce is presenting at an NASPP Power Session on September 28 (that Friday morning) called Financial Planning Strategies for Employees. Joining Bruce in this interactive session will be James Fucigna, a leading Wealth Management Director at Morgan Stanley.
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