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equity compensation plans Archives - Help with mergers & acquisitions, raising capital, creating stock options and other equity plans

Posts Tagged ‘equity compensation plans’

Stock Appreciation Rights – What Are They? Do I Want Them?

 

Are your SAR’S putting money in your pocket?

Employers have various ways of compensating and rewarding their employees and with the presence of employee stock options and all the various forms of equity compensation plans. Understanding all these methods of compensation is important. Stock appreciation rights are some of the most rewarding forms and today we will explain what they are, why you should want them and how they work.

What are they? Stock appreciation rights are an employee incentive granted by a company according to a pre-determined plan. These grants allow employees the chance to receive benefits and a bonus of sorts that is equal to the appreciation or increased value of a stock over a specified amount of time.

Why do I want them? Stock appreciation rights are highly desired due to the fact that unlike employee stock options, no exercise price is to be paid.  At the end of a given period, the dollar amount that makes up the appreciation value will be given to the employee in a lump sum or placed in a retirement fund. Each company’s procedures will vary, so consulting your own plan will give you the best understanding of how stock appreciation rights apply to you and your plan.

How do they work? Stock appreciation rights give employees the benefit of being involved in the company’s stock performance without being financially responsible for the risks. For example, an employer grants one employee 200 stock appreciation rights and over a pre-determined period of time the stock value increases by one hundred dollars per share. A simple equation will give you the total profit made from this increase; total stock appreciation rights multiplied by the increased value will equal the total take away. In this case, 200 x 100 = $20,000 profit that will be given directly to employee.

As you can see, stock appreciation rights can be an effective means of providing employees with bonuses. Each company’s plan will be different and here at Stock Connections we are equipped with tools to maximize your understanding of the plan you have been given and how the stock appreciation rights will be applied to you and your future financial decisions.

Stock Connections specializes in working with San Francisco Bay Area companies that are involved in mergers & acquisitions, are raising capital, or creating stock option or other equity plans. We help start-up, private and public firms become – and remain – SEC-compliant. Stock Connections’ services are designed to help both start-ups and established firms comply with SEC and other regulations in their equity compensation programs. If you or anyone you know is looking to get involved with any of the above, we encourage you to contact us today!

 

Incentive Stock Options: Tax Return Tips and Tricks Part Two

Are you subject to AMT?

In our last blog post, we introduced basic tips for regular reporting procedures in relation to incentive stock options. In this blog post, we will delve deeper into the issue with an introduction to alternative minimum tax and relevant reporting standards. Let’s start by understanding the basics of the alternative minimum tax and who it applies to.

What is it? Alternative minimum tax is a system of taxation within the American tax system that was originally designed to keep the loop holes used by wealthy tax payers closed. These days, the alternative minimum tax expands taxable income and disallows common deductions within the middle class. Read the rest of this entry »

Employee Stock Purchase Plans – Understanding the Essentials Part 1

 

Photo Credit: AMagill

Employee stock purchase plans can hold immense financial purpose and benefit. Understanding the procedures and processes to properly capitalize upon the benefits of employee stock purchase plans is especially important.

This two part blog series will introduce four of the essentials for understanding employee stock purchase plans and will help better your financial experience. They first two essentials are:

  1. Know how to enroll and follow procedures: Employee stock purchase plans have very detailed rules for enrollment and they will differ with every company. Be sure to understand the procedures, forms and eligibility rules before enrolling in your own plan. Be conscious of what you are authorizing by signing these forms and enrolling into your plan. We also suggest being aware of enrollment dates with an understanding of an “election period” and “open enrollment.”
  1. Understand tax qualifications: There are multiple types of employee stock purchase plans and being mindful of both tax and non-tax qualified plans will help you understand your own employee stock purchase plan better. Having this understanding will also aid in the future filings of tax returns. Do your research and be proactive about educating yourself on all aspects of your plan and how your financial decisions can affect your taxations and general outcomes. Seek professional advice if necessary.

Stock Connections specializes in working with San Francisco Bay Area companies that are involved in mergers & acquisitions, are raising capital, or creating stock option or other equity plans. We help start-up, private and public firms become – and remain – SEC-compliant. Stock Connections’ services are designed to help both start-ups and established firms comply with SEC and other regulations in their equity compensation programs. If you or anyone you know is looking to get involved with any of the above, we encourage you to contact us today!

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