ESPP & RSU Help!

Rich_Qckn

Having some difficulties and am not sure if I am doing this correctly. For the RSU's, I think I am good.

I set up a separate account and did a grant for the number of RSU's on the grant date (using $0.00001 for the price). I then set the vesting schedule (1/3 over three years) and see that the future Vesting transactions are there. On the Vesting date I will Exercise the shares for the first allotment, expense the tax amounts and then Buy shares with the balance. So all good there.

On the ESPP, I am not sure if I am doing this correctly. I have my ESPP account and there are two portions. I purchase and my company purchase the same amounts each pay. My portion is restricted for 12 months (if I leave before 12 months, I just get my money back). For the company portion, the shares vest after 12 months.

Any ideas on how I set my purchase and company purchase up?

Thanks!!

Tom Young

This doesn't sound like a "Qualified" ESPP, though it's hard to tell if that's really the case. 

With a qualified ESPP you typically purchase your stock at a discount that's not in excess of 15%.  I guess some plans create the "discount"by having the the employee's purchase price at fair market value and then having the company buy stock for the employee - at no cost to the employee - to create the discount based on all the stock acquired.  Maybe that's what's going on here, or maybe not.  But typically with the "standard" format Qualified ESPP the stock purchase by the employee really is "theirs", to do with as they wish immediately - like maybe selling at a gain or loss - so the "vesting" aspect you mention seems odd.

Is this a Qualified or Nonqualified ESPP?  Maybe you could discuss in greater detail your purchase vs. the company's purchase, i.e., prices, relative volumes, and whether the company's purchase shows up on your W-2 at vesting.

Rich_Qckn

Hey Tom - I’m in Canada, so don’t have W2 issues, but will do my best to outline things a little more (it sounds like a different type of plan I have!).

Basically I contribute a % of my salary (each pay) into the ESPP and the company matches dollar for dollar. There are two share purchase transactions that are done (one for my contribution, one for my employers contribution) and these purchases are done at market value (no discount). As noted, my contribution is “restricted” for 12 months. If I leave the company before I’ve held these shares for 12 months, then I get my money back (no appreciation in value).

For the company shares, they vest after 12 months. If I leave the company before the 12 month mark, then I lose those shares and they go back to the company.

I’m both cases (my contribution / company contribution) after the 12 month mark, the shares are totally free and clear and are mine to do as I please.

Let me know if you need further information!

Thanks,

Tom Young

You may not get a W-2 but I'd guess that Canadian tax law is similar to US tax law in that when you get "free" stock from your employer that free stock counts as compensation to you.

As to the stock the company buys for you I'd treat that stock like an RSU (NQSO) too., with a 12 month vesting. 

As to the stock you buy, I'd probably put that stock in its own "brokerage" Account.  If your intent is to stay with the company for the 12 months after your purchase then having that stock re-priced each day as the market fluctuates is a fair representation of your net worth.  If it happens that you don't stay the full twelve months you sell the shares at your cost, with no gain or loss.

Rich_Qckn

Ya, we are taxed on the company contribution when it’s made (as a taxable benefit). Will do as you suggest and will see how things look.

Rich_Qckn

And thanks!