Question

Explain the proper accounting for restricted stock awards to executives. How should companies measure non-vested restricted shares on the grant date? What about vested 2 restricted shares?

How do you find out if a compnay has any restricted stock awards on the 10-k?

Using FASB Codification

Answer 1

A restricted stock unit (RSU) is a form of compensation issued by an employer to an employee in the form of company shares. Restricted stock units are issued to an employee through a vesting plan and distribution schedule after achieving required performance milestones or upon remaining with their employer for a particular length of time.

RSUs give an employee interest in company stock but they have no tangible value until vesting is complete. The restricted stock units are assigned a fair market value when they vest. Upon vesting, they are considered income, and a portion of the shares is withheld to pay income taxes. The employee receives the remaining shares and can sell them at his or her discretion.

• Restricted stock units (RSUs) are a form of stock-based employee compensation.
• RSUs are restricted during a vesting period that may last several years, during which time they cannot be sold. Once vested, the RSUs are just like any other shares of company stock.
• Unlike stock options or warrants which may expire worthless, RSUs will always have some value based on the underlying shares.
• For tax purposes the entire value of vested RSUs must be included as ordinary income in the year of vesting.