A
- Acquisition Date (ESPP): The date on which an employee purchases shares of company stock under an ESPP.
- Adjusted Cost Basis: The original cost of an asset, plus any improvements or minus any depreciation. Used to calculate capital gains or losses.
- Award Date (RSU): The date on which an RSU grant is approved and awarded to an employee.
B
- Basis (for taxes): Generally, the original cost of an asset, used to calculate capital gains or losses.
C
- Capital Gain: The profit realized from the sale of a capital asset (like stock).
- Capital Loss: The loss incurred from the sale of a capital asset.
- Cost Basis: The original cost of an asset, used to calculate capital gains or losses.
- Contribution (ESPP): The amount of money an employee contributes (often through payroll deductions) towards the purchase of shares in an ESPP.
D
- Discount (ESPP): The percentage reduction in the market price of company stock offered to employees through an ESPP.
- Disqualifying Disposition (ESPP): The sale of ESPP shares before meeting the required holding periods for favorable tax treatment (generally two years from the offering date and one year from the purchase date).
E
- Employee Stock Purchase Plan (ESPP): A plan that allows employees to purchase company stock, often at a discounted price.
- Equity Compensation: A form of compensation where employees receive an ownership stake in the company, typically through stock options, RSUs, or ESPPs.
F
- Fair Market Value (FMV): The price at which a willing buyer and a willing seller would agree to exchange an asset. This is a key value for RSU taxation at vesting.
G
- Grant Date (RSU): The date on which an RSU is granted to an employee.
- Grant Price (RSU): The price of the underlying stock at the time the RSU is granted. This is often used to determine the value for tax purposes at vesting.
H
- Holding Period: The length of time an asset is owned. This is important for determining short-term vs. long-term capital gains tax rates and for ESPP qualified dispositions.
I
- Income Tax: Tax levied on an individual’s income, including wages, salaries, and investment income.
L
- Look-Back Period (ESPP): A feature in some ESPPs that allows the purchase price to be based on the lower of the stock’s price at the beginning or end of the offering period.
O
- Offering Period (ESPP): The period during which employees can enroll in an ESPP and authorize contributions.
P
- Purchase Date (ESPP): The date at which ESPP shares are purchased for the employee, usually at the end of the offering period.
Q
- Qualified Disposition (ESPP): The sale of ESPP shares after meeting the required holding periods for favorable tax treatment (generally two years from the offering date and one year from the purchase date).
R
- Restricted Stock Unit (RSU): A form of equity compensation that gives an employee the right to receive shares of company stock in the future, after certain conditions (usually time-based or performance-based) are met.
S
- Settlement (RSU): The process by which shares of stock are delivered to an employee after RSUs vest.
- Stock Option: The right to purchase shares of company stock at a predetermined price (the exercise price) within a specified timeframe. (While not the main topic of this site, it’s related and helpful to include).
T
- Tax Basis: The cost basis of an asset for tax purposes.
- Tax Withholding: The portion of an employee’s income that is withheld by the employer to pay estimated taxes.
V
- Vesting (RSU): The process by which an employee earns the right to receive shares of stock granted through RSUs. Vesting often occurs over a period of time.
Important Note: This glossary is intended to provide a basic understanding of common terms related to RSUs and ESPPs. It is not exhaustive and should not be considered a substitute for professional financial or tax advice. Always consult with a qualified professional for personalized guidance.