There is a file on this page Restricted Stock Unit Projection Calculator or MSW calculator. Enter the details of your most recent MSW grant, your company’s acquisition schedule, and some assumptions about your tax type and your employer’s future returns. From here, the MSW projection tool will model the total economic value of your grant over the years.
Restricted stock unit modeling calculator
Using the MSW projection calculator
To use the MSW projection calculator, follow the steps below.
- Enter the amount of your new grant, either an offer grant or an annual update.
- Calculate how much your MSW value will increase per year.
- Enter your current marginal tax rate on your MSW purchase.
- Decide Yours strategy. “Wear vests” means you sell immediately after investing stocks, while “Keep it all” means you keep your shares granted.
- Let us know your company MSW calculation. “Stock Conversion” is for companies that convert an amount of shares in advance and expose the uninvested shares to market prices, while “Fixed Dollars” becomes an amount of the stock only to the west.
By default, the calculator assumes grant vests equally for four years, with a one-year “cliff” and quarterly vests. The cliff is the first appointment you receive cap share of the new grant. The cliffs are typical of a new rental grant, although ongoing grants (also known as recharges or soft drinks) are sometimes coated immediately.
Advanced: Set a purchase schedule
If your company has a different restricted stock investment schedule or your shares do not have a 12-month cliff:
- Click the “Show” button in the dress schedule.
- Enter the percentage of the scholarship that is charged each year (up to year 6).
- Choose the investment schedule that follows your business: Annually, Quarterly, o Monthly.
- Set the length of the RSU cliff or the month you first receive any percentage of the new vest.
MSW projection outputs
There are two output options: if you choose “Calculate”, you will receive a numerical projection of your strategy. “Draw Graph” will calculate a numerical projection and also show you the cumulative breakdown of the compensation of your new grant during the purchase period.
- End of course: in the table header, you can see what year the tool is projected.
- Total amount granted: If your company exposes uninvested shares at market prices, this field projects the actual dollar value of your grant totaling during purchase periods. If it becomes a fixed-value stock on purchase, it will match your initial grant.
- Total tax paid: This field shows how much you paid in taxes based on what you paid at the time of purchase.
- Final cash balance: If you decide to sell your shares immediately, this field shows the balance at the end of the last projected year (with 0% interest).
- Final balance of the shares: If you choose to keep the actions, this field shows the estimated value of the actions at the end of the projection.
If you decide to graph your scenario, you can see how the new grant evolves. The chart will estimate your cash at the end of each year or the fair value of the shares (including market gain or loss if you own your shares).
Questions about MSW
I’ve been working in companies that broadcast MSW for … well, my whole career (yes, mine daily chores). Here are some of the MSW questions that pop up.
What are MSW?
RSU or Restricted stock units they are a form of net equity compensation where companies promise to grant you future entrepreneurial shares based on various criteria. For some industries, they are a big part of the global compensation; in some senior roles, they are the most important component.
The most common is that MSW are promised in advance and rewarded according to a schedule. For example, a regular schedule for a new rental is MSW that is awarded for four years with a one-year “cliff” (or the first vest). obstacle), and the remaining shares are evenly distributed over four years, each quarter. Most companies also update or “top up” your grants annually or in conjunction with high performance or promotion. Sometimes these soft drinks are coated immediately, while other companies also add a new cliff.
MSW almost always has value. MSW becomes actions and a claim on the future performance of a business, so that except in the event that a company goes bankrupt i equity is eliminated, there is a future market for that equity. Generally in the United States, you must pay taxes at the time you cover your MSW, that is, when they become common stock.
Generally, listed publicly companies grant MSW, although private companies have begun to grant MSW (liquidity is more complicated before IPO, although some companies allow a secondary market).
Should I always sell my MSW?
Canonically: it is best to sell your created shares and diversify your savings into something that is not related to your employer (and even your industry). In addition, your employer may impose additional restrictions on your operation, making the actions of employers less advantageous to maintain:
- You probably have a limited trading period or you may be restricted at some points due to inside information.
- You may not be able to buy or write options on your shares (or use them as collateral for loans).
- You may have restrictions on taking positions in other companies in your industry.
Especially with trading windows, it can be tricky to sell stocks at a loss without meeting the rules of selling laundries [PDF] from new MSW grants or ESPP actions.
However, there are strong counter-arguments in favor of maintaining at least some actions:
- You probably know your competitive position and potential well; if there is any company that is qualified to operate, it is your employer.
- Sometimes illiquidity works in your favor; if you are blocked from trading in the middle of the quarter, you are less likely to make hasty investment decisions due to the fall of the broader market.
- In some cases, you must have some actions as a condition for your job or to run for a seat on the board.
It’s not as simple as a “never hold” or “always hold” binary. Take the argument of diversification seriously, for sure: Enron, Arthur Andersen and other companies prove it possible its net worth is reduced to zero. But sometimes, you can also find success by focusing on the actions of a company, and you are likely to be familiar with your employer.
All I can say is: it’s up to you. Make sure you are at least well diversified before making big changes. Personally, I’ve sold a fair amount of previous RSUs, but I also have a respectable amount of shares acquired (and none of my employers ’shares have been reduced to zero: touch the wood!).
Do I have to pay the taxes I owe for cash grants?
In most countries (including the United States), you must pay taxes on your MSW as soon as they are acquired. However, many companies allow you to choose to pay your taxes in cash instead of selling a portion of the newly created shares to raise money.
In theory, paying your taxes in cash is no different than buying your company’s shares on the open market. In practice? It’s complicated.
For some companies, share-based compensation is quite significant and the total company-wide shares sold for taxes is a substantial percentage of the average daily transaction volume of shares.
Is it like that sometimes it’s worth paying the tax in cash, even if you plan to sell in the next few days, to avoid distortions caused by the forced sale of your co-workers. Your mileage may vary. (And if you plan to keep your actions, you should model them as well).
Projection of the effects of an MSW grant
Especially in many technology and biotechnology companies, stock-based compensation can be an important component of your total compensation. And through some market cycles, people sitting in their hands and holding stocks have performed very well, but be careful not to focus too much risk on a single company. Your employment and profits already depend on your employer – do you want to add a significant amount of savings risk … especially if you don’t have a substantial mass of other assets?
However, except in the most extreme cases, MSW is real money; it’s not about ghost equity that should be canceled. If you work in a listed company, or in a private company with a secondary market, IPO on the horizon or potential for mergers and acquisitions, take your equity compensation very seriously.
MSW is one of the best benefits that an entrepreneur can offer and, of course, they have the potential to be appreciated in an extraordinary way depending on the performance of your company … and the general levels of the market. Monitor companies with generous grants, and hopefully this tool will help you better value your restricted stock.
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