Allowed to sell shares on vesting date?

Companies can create blackout periods for legal or clerical purposes.  This should fall under that category.  The risk is that the stock price falls after vesting, but before the shares are delivered, but this is a common risk in many ESPP plans and other equity plans.

I am sure some of the Global Mobile Mavens can explain systems that can automate the tax calculation, but you need to have enough activity to warrant the budget.

Another potential solution is changing the Fair Market Value definition for determining income at vesting.  Using the closing price from the prior day, may give you enough time to determine both the income and taxes due before the end of trading on the actual day of vest.

I would love t hear how other companies are handling this!

Sorry, I should have clarified a few points:

• We use share withholding whenever legally possible


• Our FMV is the closing price the previous business day


• We do use KPMG to calculate the tax rates for our globally mobile employees.  The problem is that often we use the rate provided by KPMG, or the local subsidiary for non-mobile employees to process the vesting.  Then when the subsidiary sends the details to the local payroll company, the local payroll says that the rate is incorrect and they cannot process via the payroll.  We then need to wait while the discrepancy is debated by KPMG and the local payroll, and often this takes days.


• Our plan is to do a pro-forma vesting several weeks in advance of the vesting date to send to the local payroll to try to determine any discrepancies in advance.  However, sometimes we still have discrepancies based on the actual stock price at the time of vesting which is impossible to accurately project weeks in advance.

Thanks Jill,

Great clarifications. Of course, now I am REALLY interested in seeing other peoples responses!

Jill,

At Watson we've implemented a RSU vesting policy whereby we notify key contacts at each country site of an upcoming vesting at least 2-3 weeks prior to vesting date and request them to provide applicable tax rate to apply to each individual (or group as case may be) by the 2nd day before the actual vest date.

We use the days close on vesting for FMV

We typically have quarterly/annual awards hence quarterlyannual vesting

We do withhold shares to cover taxes due where possible

Usually we process the vesting that evening and shares are posted and marked sellable to participant's account by next market day.

I hope this helps, I too would like to hear what other's are doing.

Alma

Watson