Question

A company wants to reward key employees and is considering a restricted stock plan. They have asked you for advice on whether there is an advantage to offering restricted stock units instead of a restricted stock award. What happens if you are fired, retire or die prior to the end of the vesting period?

Answer 1

The offering of the restricted stock units are suggestable than giving the restricted award.

Explanation for the above statement is as follows :-

1. If we give the award they feel that they have achieved the best performance of the organization and there is chance to stop the einnovative idea that helps organization to get better results.

2. If we give the restricted stock to employees they become owners of the company for a least percentage and they get returns for the performance of the company .

3. Then employees get the feel like they get good returns if and only if they give good performance and try to make out the excellent results.

4. This extracts the best working of the employees to get the better results of the company in all aspects.i.e. finance and all other operations.

What happens if employee is fired, retire and die prior to vesting period.

Answer to the above question is as follows :-

1. If employee fired then the rights from that employee to be taken back and can be reissued to other employees.

2. If the employee got retirement We can assess the retirement time so we can stop issue of stock and if the employee is ready for retirement he/she cannot give services to our company in future. Rather than issue of stock to that employee giving award is good. That award will be appreciation to the service of the employee for a long years.and employee feel that the company recognized the hard work and sincerity and employee get happy and make good mouth publicity about our company.

3. If employee is died then we can contact their legal hiers regarding our stock and get back the stock from them.

So by analyzing all the above mentioned points issue of stock will get better results to the company rather than giving away to the employees.

These are all the information about better decision of giving the award or stock to the employees.

I hope, all the above given points and explanations are useful and helpful to you.

Thank you.