Test Your Equity Comp Knowledge: New Quizzes Expand The Fun Interactive Content Of myStockOptions.com

Put your books away, class. Time for a pop quiz:

  • Can you define a corporate change of control?
  • In what ways can equity awards be handled in a corporate merger, acquisition, divestiture, or spinoff?
  • How can a pre-IPO company create liquidity for its stock other than being acquired?
  • Why do some privately held companies grant early-exercise stock options?
  • How soon after an IPO can you sell company shares?
  • What is a lockup, and how do the lockup requirements differ from those under Rule 144?

The current back-to-school climate makes this an appropriate time to announce two new quizzes at myStockOptions.com. Bringing our total number of quizzes to a dozen, the recent additions test your knowledge of equity compensation issues in M&A transactions and pre-IPO companies.

Our quizzes are free to all users of our website (companies can license and customize them for their stock plan participants). All 12 are available by links from our home page, and each quiz also appears on the landing page the relevant content section. The answer key of each quiz has links to relevant articles and/or FAQs, making the quizzes not just gateways to our award-winning content but also helpful learning tools in themselves—and much more fun than homework.

Our short quizzes are separate from our Learning Center, which has in-depth courses and exams offering continuing education credits for Certified Equity Professionals (CEPs) and Certified Financial Planners (CFP). Our quizzes are also part of our growing body of interactive and multimedia content, which includes podcasts and videos.

Restricted Stock & RSUs In The Media Spotlight

While restricted stock and restricted stock units typically don't attract as much media attention as stock options, they do when the grants involve chief executives, such as the incoming CEO at J.C. Penney. The company's new head, Ron Johnson, is giving up valuable restricted stock grants from his prior company (Apple) that would have had substantial value at vesting. The grants from J.C. Penney are intended to offset this loss. As many news reports have pointed out, Mr. Johnson is planning to invest a roughly equivalent amount in J.C. Penney.

Media attention is one thing; media ire is another. As anybody who reads the business headlines will know, journalists routinely react with cynicism or even outrage when unequal stock grant practices are applied to executives and employees. The author of a recent article at BNET (CBS business news) laments what he calls the "lousy corporate governance" that led to a harsh disparity between executives and laid-off employees at one recently acquired company. (See At Genzyme, Laid Off Workers Lose Stock Bonus...But The CEO Keeps His.) Let go to reduce costs and make the company run more efficiently, terminated employees lost all of their unvested grants in the months before the M&A deal was announced. Meanwhile, the unvested grants of executives still with the company at the closing were fully accelerated and converted into the merger consideration (see page 8 of the company's Schedule 14D-9).

Unfortunately, the treatment of RSUs and other equity awards at termination may not always be to your liking, even in an acquisition (see the M&A FAQs at myStockOptions.com). However, it can be favorable: the employees of an acquired company can just as easily receive new grants. This happened at Salesforce.com upon a recent acquisition, according to a press release.