What does this equity mean please?

[swanpeach]

Hi all, i have this question
Equity Award. Subject to the approval of the Board of Directors of xxx. (the “Board”) or the Compensation Committee of the Board, you will be granted an award covering ordinary shares of xxx. with an approximate value of $75,000.00 USD (the “Equity Award”), the actual form of which will be determined by the Board or Compensation Committee at the time of grant. The dollar value will be converted into a number of shares subject to the Equity Award at the time the award is granted in accordance with our equity grant practices in effect at that time


when i joined the company , the share price was 73 dollars.
now it is 95 dollars

what does this mean or how to calculate ??

 

[JuniorLion]

It means you are given shares, whose equivalent value is $75,000 USD.

If the share price is 95 USD now, then you can calculate how many shares you are given.

75000/95 = ?

 

[swanpeach]

But then the amount of. Cash itself. Will. Be how much?

 

[JuniorLion]

But then the amount of. Cash itself. Will. Be how much?

You wrote 75000 USD yourself. How much you think it will be?

 

[swanpeach]

but the price has risen from 73dollars per share to 95 dollars?

 

[peterchan75]

Since, stock option is never mention and it's called Equity Award, then I would assume the stocks are given to you outright. They key question is how many shares were given to you? Sell the shares and keep all the monies.

If it's a stock option, the coy will tell you that you are granted an option at a certain price and when you can exercise the option. Once the time comes, and the price is above the option price, you can exercise the option keep the profit(market price - option price).

Don't forget the set aside some money to pay IRS.
All the profit will be reflected in your IR8A as income and you need to pay income tax.

If in doubt, check with HR department.

 

[BBCWatcher]

You haven’t explained what the terms and conditions are with your equity award. For example, you could have been awarded the shares as a something of a signing bonus but were required to hold the shares for a certain period of time — two years, for example — with no other restrictions. Or, more typically, you have to work for the company for a certain length of time before the stock vests, meaning that you actually own the shares. Sometimes the vesting will be in stages, for example you get the first US$25,000 after 24 months with the company, another US$25,000 after 12 more months, and the final US$25,000 after 12 more months.

Anyway, we don’t know because you haven’t told us.

The U.S. Internal Revenue Service (IRS) is not a given. It is if you’re a U.S. person, but otherwise the IRS would be involved if this company’s stock is U.S. listed. Since the stock’s listing currency is U.S. dollars, that’s very likely, but technically there are some non-U.S. listed shares that are quoted/traded in U.S. dollars. You may be subject to tax withholding, and you may need to file an IRS Form 1040NR.

 

[swanpeach]

thank you, yes i have to work for 4 years. and every year get 25 percent
but im curious. mean 75 k spilt in 4 years?
there is no increase i it cause the stock value has risen?, its singaporean company

 

[BBCWatcher]

thank you, yes i have to work for 4 years. and every year get 25 percent

OK.

but im curious. mean 75 k spilt in 4 years?

Yes, it certainly appears so.

there is no increase i it cause the stock value has risen?, its singaporean company

You'll have to check the terms and conditions. But it looks like you were awarded a certain specific number of shares. The approximate valuation was expressed at a moment in time, but what you actually got (it appears) was/is a certain number of shares. Let's suppose that number is 1,000. Then, according to what you've described, every 12 months you get 250 shares until 48 months have passed, and you have gotten all 1,000 shares. That's called incremental "vesting."

Then you may or may not have a minimum holding period once each block of shares is vested (earned). You may be required to hold each increment for some period of time, or you might be able to sell each block (250 shares per block in this example) as soon as they are vested.

If you are a resident of Singapore (only), not a U.S. person, and if the stock is Singapore listed/traded (on the SGX), then as you receive each 25% increment of shares they are taxable only in Singapore at the fair market value on each vesting date. So, for example, if you get a block of 250 shares vested on March 1, 2019, and if the share price is S$93 each, then you have S$23,250 of taxable income. That should appear on your annual IR8A form as peterchan75 mentioned, and it'll increase your income tax payment(s) next year since IRAS operates in arrears. (GIRO payments are best to stretch out the tax payments farther into the future.) But that's it -- just the income tax on the fair market value as each quarter vests. You can sell the stock or not, partially or fully, as you prefer, after whatever minimum holding period applies, if any. Under the same assumptions, subsequent capital gains and dividends are Singapore tax free.

My recommendation would be to avoid having this or any individual stock represent more than a small percentage of your total wealth -- 5% seems like a reasonable cap.

Congratulations.

 

[henrylbh]

Hi all, i have this question
Equity Award. Subject to the approval of the Board of Directors of xxx. (the “Board”) or the Compensation Committee of the Board, you will be granted an award covering ordinary shares of xxx. with an approximate value of $75,000.00 USD (the “Equity Award”), the actual form of which will be determined by the Board or Compensation Committee at the time of grant. The dollar value will be converted into a number of shares subject to the Equity Award at the time the award is granted in accordance with our equity grant practices in effect at that time


when i joined the company , the share price was 73 dollars.
now it is 95 dollars

what does this mean or how to calculate ??

Simply put, you will be given or granted shares valued about 75k. Once the Board approved the grant, the actual number of shares will be based on the value at the grant date. If the price at grant date is $100, you will get about 75k/$100 shares.

 

[swanpeach]

Sorry I mean I'm sinagaporean. But the stock. Is in the states.

So it means they will. Give me 75 k. With of stocks. So. Eg I sell my 75k to get the number of shares. Eg maybe 1000 shares.

Then I. Keep. The 1000 shares. And I. Wait for the price of. The shares to go up. And I buy it?

 

[JuniorLion]

It means you are given shares, whose equivalent value is $75,000 USD.

If the share price is 95 USD now, then you can calculate how many shares you are given.

75000/95 = ?

Simply put, you will be given or granted shares valued about 75k. Once the Board approved the grant, the actual number of shares will be based on the value at the grant date. If the price at grant date is $100, you will get about 75k/$100 shares.

That's what I said there. But he doesn't get it.

 

[BBCWatcher]

Swanpeach, we cannot really help since we’re not looking at the terms and conditions in your grant award. I actually disagree a bit with recent posters since it seems like the award was pegged to a particular number of shares, not a U.S. dollar value. The share count was described with precision — “XXX” — while the U.S. dollar value was not. Ordinarily that means you received a stock award as a number of shares, and that’s the most common kind.

Your descriptions are pretty confusing. You’ve now indicated that it’s both a Singapore company and a U.S. company. Which is it? What matters for U.S. tax purposes is whether the stock is listed in the United States — on Wall Street, usually. The fact your stock award apparently includes an approximate U.S. dollar figure is a strong indication this stock is listed/traded in the United States and thus subject to IRS-related tax rules, too.

....The only way this stock award significantly matters is if you’re trying to decide whether to leave your company before the fourth award vests. So are you trying to decide that question?

Otherwise, it really doesn’t matter since it’s beyond your control. It’ll just happen. You’ll get some stock awards, they’ll be however big or small they are, and you’ll pay whatever taxes are owed. And then (I would advise) you’d sell at least enough shares, when able, to keep this stock below 5% of your net worth.

You’re also going to have great information available after the first increment vests, because you’ll see what you get. So all you have to do is to survive until the first 25% is awarded, and then just look at your payroll and stock award statements (and tax statements). If you like what you see, great, stay at your company for the next increment. Simple, right?

 

[henrylbh]

Swanpeach, we cannot really help since we’re not looking at the terms and conditions in your grant award. I actually disagree a bit with recent posters since it seems like the award was pegged to a particular number of shares, not a U.S. dollar value. The share count was described with precision — “XXX” — while the U.S. dollar value was not. Ordinarily that means you received a stock award as a number of shares, and that’s the most common kind.

Your descriptions are pretty confusing. You’ve now indicated that it’s both a Singapore company and a U.S. company. Which is it? What matters for U.S. tax purposes is whether the stock is listed in the United States — on Wall Street, usually. The fact your stock award apparently includes an approximate U.S. dollar figure is a strong indication this stock is listed/traded in the United States and thus subject to IRS-related tax rules, too.

....The only way this stock award significantly matters is if you’re trying to decide whether to leave your company before the fourth award vests. So are you trying to decide that question?

Otherwise, it really doesn’t matter since it’s beyond your control. It’ll just happen. You’ll get some stock awards, they’ll be however big or small they are, and you’ll pay whatever taxes are owed. And then (I would advise) you’d sell at least enough shares, when able, to keep this stock below 5% of your net worth.

You’re also going to have great information available after the first increment vests, because you’ll see what you get. So all you have to do is to survive until the first 25% is awarded, and then just look at your payroll and stock award statements (and tax statements). If you like what you see, great, stay at your company for the next increment. Simple, right?

He only asked what the meaning of the paragraph he quoted and nothing more. Just explain and not need to know the terms and conditions till he decide to mention more.

Further he said that it's a Sg company and your are confused and yet said so much and assumed so much. Quite a number of big foreign companies in Sg do give or grant management staff shares in the mother companies (which need not be US companies) and USD does not mean mother shares are in US or listed in US.

 

[swanpeach]

true leh. all i asked is is the number of equity pegged to the shares. lol
what taxation all come out . i blur.
all i wan know is eg
they say i get 75 of equity ,
so... eg

75k/ 70( price per share ) = number of shared i have,
so end of one year. if heng the value of 1 share is say 95 doallrs. is it 1 x95 buck

 

[BBCWatcher]

Henry’s psychic abilities notwithstanding, we don’t know. (I have a better guess, as it happens.) Wait for the deferred compensation or leave the company before all shares vest, your choice.

 

[JuniorLion]

true leh. all i asked is is the number of equity pegged to the shares. lol
what taxation all come out . i blur.
all i wan know is eg
they say i get 75 of equity ,
so... eg

75k/ 70( price per share ) = number of shared i have,
so end of one year. if heng the value of 1 share is say 95 doallrs. is it 1 x95 buck

It depends on when they give the share to you. Once given, it won't change. For example, if 1 share is $75, you get 1000 shares now.

If end of the year, the share price is $7500, your 1000 shares remain.
If end of the year, the share price is $0.75, your 1000 shares remain.

So difficult?

Anyway, why are you so worried about this? Do you have any choice/alternative? If you don't have any choice, there's no point worrying. Unless your objective is to decide whether to quit before or after you receive the shares.

 

[henrylbh]

thank you, yes i have to work for 4 years. and every year get 25 percent
but im curious. mean 75 k spilt in 4 years?
there is no increase i it cause the stock value has risen?, its singaporean company

Look at the terms of the grant. From the little you mentioned, I think you will be given about 75k/xxx shares over a period of the employment. The increase or decrease in stock price subsequently would be your luck, but certainly you will be taxed depending on the terms of the grant, as part of employment income.