Stock Unit Award Agreement
What is this form?
The Stock Unit Award Agreement is a written contract between a company and an employee or director, also known as a grantee. This agreement serves to establish the terms and conditions under which stock units are awarded. Unlike other types of stock awards, this form includes Dividend Equivalent Rights, making it distinct in benefiting the grantee during the vesting period. The Stock Unit Award Agreement is typically part of a larger stock incentive plan aimed at motivating employees towards the company's success.
Form components explained
- Details of the grant, including the number of stock units and the conditions for receiving those units.
- Transfer restrictions that prevent the grantee from selling or transferring the awarded units.
- Vesting schedule outlining when stock units become earned by the grantee.
- Provisions for accelerated vesting in cases of death, retirement, disability, or organizational change.
- Tax obligations and withholdings related to the awarded shares.
- Conditions under which the agreement can be rejected by the grantee.
Situations where this form applies
This form is used by companies when they want to incentivize key employees or directors with equity compensation. It is particularly appropriate when aligning employee interests with those of shareholders, motivating performance, or during significant transitions like mergers or acquisitions. If an employee's role within the company warrants an incentive based on the companyâs stock performance, this agreement is essential.
Who this form is for
- Companies offering stock units as part of an employee incentive program.
- Employees or directors who qualify for stock awards under the company's stock incentive plan.
- Employers seeking to retain talent and align employee performance with the company's success.
Steps to complete this form
- Identify the parties involved: the company and the grantee.
- Enter the date of the agreement and the specific number of stock units awarded.
- Specify the vesting date and any restrictions on transferability of the stock units.
- Outline the conditions for accelerated vesting, including any relevant termination scenarios.
- Include tax withholding agreements and signature lines for both parties.
Does this form need to be notarized?
This form does not typically require notarization unless specified by local law. Users should verify any state-specific requirements that may necessitate notarization for added legal protection.
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Make edits, fill in missing information, and update formatting in US Legal Forms—just like you would in MS Word.
Download a copy, print it, send it by email, or mail it via USPS—whatever works best for your next step.
Sign and collect signatures with our SignNow integration. Send to multiple recipients, set reminders, and more. Go Premium to unlock E-Sign.
If this form requires notarization, complete it online through a secure video call—no need to meet a notary in person or wait for an appointment.
We protect your documents and personal data by following strict security and privacy standards.
Common mistakes
- Failing to specify the number of stock units awarded.
- Not clearly outlining the vesting schedule or transfer restrictions.
- Overlooking tax obligations associated with the stock units.
- Ignoring the proper procedures for rejecting the agreement if desired.
Why use this form online
- Convenience of downloading and completing the form at any time.
- Editable fields allow customization based on specific company policies.
- Access to templates drafted by licensed attorneys, ensuring legal reliability.
- Secure storage of completed forms for future reference.
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FAQ
RSUs are currently the most common type of equity award. They are a promise from the employer to grant company shares to their employees at a future date (or series of dates). RSUs typically vest over a period of time. Some awards may be contingent on meeting specific performance marks (Performance Shares noted below).
Restricted stock awards (RSAs) and restricted stock units (RSUs) are two alternatives to stock options (such as ISOs and NSOs) that companies can use to compensate their employees. While stock options offer employees the ?option? to buy shares at a fixed price, RSAs and RSUs are grants of stock.
The Stock Award is an unfunded and unsecured promise by the Company to deliver shares in the future. Capitalized terms used and not otherwise defined herein are used with the same meanings as in the Plan.
Each RSU will correspond to a certain number and value of employer stock. For example, suppose your RSU agreement states that one RSU corresponds to one share of company stock, which currently trades for $20 per share. If you're offered 100 RSUs, then your units are worth 100 shares of stock with a value of $2,000.
RSUs are taxed as income to you when they vest. If you sell your shares immediately, there is no capital gain tax, and you only pay ordinary income taxes. If instead, the shares are held beyond the vesting date, any gain (or loss) is taxed as a capital gain (or loss).
A good RSU offer is one that should incentivize you to put your best foot forward. One of the primary purposes of offering employees company equity is to encourage them to feel as though they have a stake in the company.
A stock option award is a type of compensation contract that companies use to incentivize employees. This contract is an agreement between the company and employee that gives them the right, but not the obligation, to purchase shares of company stock at a set price in the future (usually for pennies on the dollar).
Stock awards provide corporations a way to pay their executives based on company performance so their compensation aligns with the expectations of the shareholders. Companies may also grant stock awards to lower-level employees to incentivize them to take ownership of the company's performance and retain their loyalty.
