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"Options" vs. "TSRUs"

unknown

My company switched from "options" to "TSRUs" (like option but include dividends), how can I record those grants?

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NotACPA

Why don't you explain what a TSRU is AND why you can't record it as if it WAS an "option".

unknown

TSRU is both similar to Option & Restricted Stock grant, plus additional wrinkle.

TSRU is grant of a # shares at a specific strike price with a specific vesting schedule.

However, like RSU it has specified sell schedule.

Also, you are credited for all dividends paid out between the grant & sell date.

For example:
Granted 1000 shares on 1/1/12, strike price $10, vesting date of 1/1/15, and sell date of 1/1/17.

On 1/17, market price is $20, and over the 5 years a quarterly dividend of $0.10 per share was paid out.

Payout = ( ($20-$10) + ($0.10 x 4 x 5) ) x 1000 =
( $10 + $2 ) x 1000 = $12,000

mshiggins

I've never heard of RSUs having a specified sell schedule. Is this in Canada, the U.S., or somewhere else?

unknown

USA, it's sort of hybrid of options & RSUs

NotACPA

Found these definitions on Fidelity NetBenefits:
***

TSRU

Total Shareholder Return Unit

TSRUs Granted

The number of total shareholder return units an issuer (e.g., your company) has awarded to you. TSRUs give you the
right to receive an award of shares with a value equal to the change in stock price over a set period of time as well
as dividend equivalents accrued over that same time period, subject to certain restrictions.

TSRUs Vested

The number of total shareholder return units that have vested.

TSRUs Unvested

The number of total shareholder return units that have not yet vested.

TSRUs Settled

The number of total shareholder return units that have settled.

TSRUs Cancelled

The number of total shareholder return units that have been canceled
because you no longer work for the employer who issued them.

TSRUs Balance

The number of total shareholder return units that are currently outstanding.

TSRU Potential Value

Total value of the number of outstanding TSRUs multiplied by the most recent Gain per TSRU calculation.

TSRU Settlement Date

The date the TSRU award will be settled.

TSRU Settlement Price

The fair market value calculation of common stock on the settlement date of the grant of TSRUs

TSRU Distribution FMV

The price per share of the underlying stock at the time your total
shareholder return unit was distributed and as used to determine
the amount of income treated as compensation for Federal income tax
purposes.. The price per share is based on the fair market value (FMV)
option that your company's TSRU plan uses. Fair market value is based
on either the prior business day's close, average high and low for the
day, real-time price, or today's close as defined by the company's plan
rules.

NotACPA

AJ, you've still never explained why you can't record these as options.
Also, what Q product and year are you running?

unknown

Windows 2017...

If I enter as options, then it doesn't account for the dividends, which can account for $4-$6 per share...

mshiggins

Are you just trying to track the value of the TSRUs? You might be able to do that using the option wizard to set up the grant. But I don't think there is any way the tax implications will be right.

q_lurker

Windows 2017...
If I enter as options, then it doesn't account for the dividends, which can account for $4-$6 per share...

Not my area, but could you simply fudge the market value of the shares. Per your example above, when the market value is $20, you plug in $22. You would need to somehow track those dividend contributions separately.