• Robert M. Fields

4. Restricted Stock Units

a. Design:

i. Each RSU represents a promise by the company to deliver to the individual one share of stock at a predetermined date in the future. RSUs are subject to forfeiture in the event certain employment requirements or performance vesting requirements are not met. RSUs may be granted in such amounts and subject to such terms and conditions as determined by the company.

ii. Each RSU award agreement should specify the individual’s (and his or her beneficiary’s) rights in the event of death or other termination of employment.

iii. Since RSUs may constitute non-qualified deferred compensation described under Section 409A of the Code, certain design restrictions may apply. I would be pleased to discuss these with you at your convenience.

b. Federal Income Tax Implications:

i. Impact on the Individual:

1. An award payable in the form of RSUs generally will be includable in the individual’s gross income as of the date the underlying shares of stock are transferred to the individual or, if later, the earlier of the date the underlying stock awarded to the individual (i) is subsequently transferable by him or her or (ii) is not subject to a substantial risk of forfeiture.

a. At the time the stock underlying an RSU is distributed to an individual (or, if later, when the stock becomes non-forfeitable), he or she will recognize ordinary income to the extent of the excess of the fair market value of the stock on the date of delivery (or, if later, the date the substantial risk of forfeiture terminates) over the individual’s cost (if any) of the stock.

b. If an individual disposes his or her shares of the company’s stock received under an award in a taxable transaction, the individual will recognize capital gain or loss in an amount equal to the difference between his basis (generally, the amount included as ordinary income pursuant to the award and the amount, if any, paid for the stock) in the shares sold and the total amount realized upon the disposition. Any capital gain or loss will be long‑term so long as the shares of the company's stock were held for more than one year from the date the shares were granted to the individual.

ii. Impact on the Company:

1. At the time the individual recognizes ordinary income upon the receipt of the stock underlying RSUs, the company generally will be entitled to a federal income tax deduction in the amount of the ordinary income so recognized.

Robert M Fields Logo.png