Restricted Stock & RSUs: 3 Planning Tips

Restricted Stock & RSUs: 3 Planning TipsEquity compensation is becoming more mainstream and is not just for executives anymore. Grants of restricted stock or restricted stock units (RSUs) are getting to be more common than stock options – and the rules are different, as is the tax planning. Below we will look at some of the particulars of how restricted stock and RSUs operate, how to understand a grant, planning for the tax consequences, and what to do after the shares vest.

How Restricted Stock and RSUs Work

At their core, restricted stock and RSU company shares that vest according to a schedule can be awarded as compensation. The vesting schedule can be tied to length of employment, meeting certain performance criteria, or a combination of both. Upon vesting, the employee owns the shares themselves and can do what they wish with them – from holding, selling, gifting, etc. While this might sound simple, the devil is in the details.

Understanding Your Grant

First, it is important to understand that restricted stock or RSUs are similar to stock options but have important tax and financial planning differences.

There are important facts you need to determine. First, how does the vesting schedule work; what amount of shares vest and when? Is the vesting simply tied to length of service or are there performance or even liquidity event triggers? Second, what are your tax-withholding choices?

From there, you can determine or at least estimate key factors such as how much the award will be worth both pre-tax and post-tax.

Tax Planning – Section 83(b) Election

Taxation can be tricky with restricted stock and RSUs. One strategy is to use a Section 83(b) election for restricted stock.

Typically, a person is taxed when the restricted stock vests regardless of whether the shares are sold. The Section 83(b) election allows the taxpayer to be taxed on the share value at the grant date instead. This election can be made within 30 days from the grant date of the restricted stock and is not an option for RSUs.

Why would you want to consider a Section 83(b) election? Remember that regardless of the election or not, you are taxed as ordinary income for the share value regardless of whether you hold or sell the shares. The advantages are that if you think the stock price will rise between the grant and vesting, then you will pay less ordinary income tax and have lower cash outflows. Second, after the initial taxation of the grant, the change in value after this point is capital gains.

Tax Planning – Withholding

The other issue to consider is not withholding enough taxes. The IRS rules say that your company is required to withhold 22 percent for restricted stock and RSUs (37 percent for income over $1 million during the same year).

The problem is that there is a good chance your margin tax bracket is higher than 22 percent if you are receiving these kinds of equity compensation awards. As a result, you will need to make some estimated payments to cover the difference. Unless you have enough cash from other sources, you may need to consider liquidating some of your shares to cover the tax bill.

The conundrum here is that if you do not see the shares immediately and the price falls, then you will be selling shares at a lower value than what you are being taxed on. It is best to consider your holistic tax scenario and work with your tax advisor to come up with a plan.

Game Plan for After Vesting

Aside from the tax consequences, you need to consider the impact on your overall financial planning. One of the biggest risks taxpayers can face is that they become heavily concentrated in the company stock. You will need to look at your overall portfolio and consider if you need to diversify depending on how much of your net worth is tied up in a single stock now.

Some financial planners recommend looking at the situation this way in an example with your shares worth $150,000 at vesting. If you had $150,000 in cash to invest, pay down debt, etc., would you use all of that to buy the company stock? If the answer is no, then why would you hold it? In other words, do not let tax implications lead your financial planning decisions.


More and more companies are issuing compensation in equity forms such as restricted stock grants or RSUs. Make sure you understand your vesting schedule and conditions so you can plan for the tax implications as well as your overall financial picture.

How to Develop a Hybrid Work Policy Post-Pandemic

How to Develop a Hybrid Work Policy Post-PandemicAccording to a Prudential survey, 87 percent of respondents said they would prefer to work remotely at least one day per week. This is compared to 13 percent of respondents preferring to work at the office all the time. The same survey found that one-third of respondents wouldn’t want to work for a business that had a 100 percent on-site work policy.

According to a report from Microsoft titled, “The Next Great Disruption is Hybrid Work – Are We Ready?” 54 percent of employees report “feeling overworked” while 39 percent say they “feel exhausted.” The study attributes these employee feelings to an overload of “digital collaboration” through “remote meetings, emails, chats, and groups working on documents together.” With workers reporting a desire for change in the workplace, how can companies develop their own hybrid work policy?

Crafting an Effective Hybrid Work Policy

By developing the right mix of remote work and office work, employees and employers can find a balance that works well for everyone. Looking to Fujitsu, as Harvard Business Review (HBR) explains, we can study a model of how the pandemic changed everyone’s view – including owners, managers and workers – of working in the office all the time.

Hiroki Hiramatsu, head of the human resources unit at Fujitsu, realized that the 120 minutes people spent traveling to work could be put to better use. There was a better mousetrap to be devised to make both the business and its workers more efficient with a hybrid workplace plan. For businesses that want to create more flexible working arrangements, HBR believes there are four areas of focus:

1. Employee’s Position and Responsibilities

The first task is to examine the employee’s position and list of responsibilities. HBR looks at the job of a strategic planner and hones in on the attribute of focus. They are responsible for creating business plans and obtaining details on their industry. Requiring intense focus, they need time that is not interrupted; hence, this can be performed virtually anywhere.

Looking at the team manager, being able to coordinate things is imperative. Team managers are more efficient and effective in person to provide guidance and job-improving feedback while in the office working on projects.

While there’s no cut-and-dry call on where both of the scenarios could be done, with a hybrid work policy, certain tasks can be done anywhere, while other tasks are more effectively completed at home or at the office. A hybrid work policy merges the benefits for businesses and their employees.

2. Worker Inclinations

HBR explains that it’s imperative to understand individual worker preferences and aid teams to work within such preferences. Using the example of two strategic planners, there are different employees with different work and family lives. One lives far away from the office, has a busy family life with kids in school and prefers a hybrid work approach. The other employee is at an earlier stage in their career, doesn’t have a dedicated home workspace and lives near the office.

This stage is where companies can speak with employees and have them take surveys to see how a hybrid workplace policy can be constructed for optimal employee engagement.

3. Reworking How Work is Done

When it comes to working outside the office, HBR explains that in a hybrid work environment, businesses have to get creative, especially with technology. HBR uses the example of the Norwegian Equinor corporation that is involved in handling gas from North Sea fields. In place of normal operations for plant inspections, robotic devices were supplied to provide real-time visual data for inspection engineers to complete their jobs remotely with the same level of accuracy.

4. Equal Policy Application

Regardless of the hybrid policy that’s developed, it’s important to maintain inclusion and fairness. HBR points out that without applying the policy evenly, it can lead to less productive workers, higher rates of burnout, fewer instances of teamwork, and more turnover. Additionally, with select employees having time- and place-dependent jobs unsuited or not optimized for a hybrid workplace, many felt they were treated unfairly when this approach is taken.

HBR gives the example of how Brit Insurance changed the traditional approach to the uneven application of a hybrid work policy. One out of 10 of its employees were chosen randomly, from all departments and job roles. Over the next six months, these employees were put in six-person groups to work together virtually. After reflecting on their working styles and capabilities, and their coworkers’ and company’s needs, they concluded that by developing ideas based on their experience and sharing them with the CEO, change would occur. The project resulted in the Brit Playbook, documenting novel ideas for employees to work together.

While each business is unique and will have its own tailored hybrid plan, taking the time to learn how to develop it effectively it will help reduce problems in implementing it.


How Will Uncertain Inflation Outlook Impact Stock Market?

How Will Uncertain Inflation Outlook Impact Stock Market?The June 16 Federal Open Market Committee (FOMC) meeting Q&A session with Chairman Jay Powell and recent comments from The Fed have signaled two potential inflation rate hikes in 2023. Two days later, James Bullard, president of the Federal Reserve Bank of St. Louis, signaled there could be a rate hike as soon as 2022. With these mixed signals and upcoming FOMC meetings, how might inflation and the markets play out in 2021?

Inflation and the Dollar

One explanation for inflation is that there are too many dollars chasing too few goods – or more simply put, things will cost more over time. Say you can purchase a pair of shoes for $100. Then, inflation is 3 percent over the course of a year, making them cost $103 after one year.

This example illustrates when the cost of things – including school, housing, clothes, food, energy, etc. – increases according to the Consumer Price Index or CPI, as the U.S. Bureau of Labor Statistics defines it.

Some Factors Impacting Inflation

One of the Federal Reserve’s dual mandates is price stability. There are three ways The Fed can steer inflation.

The first is by adjusting the Federal Funds Rate, which determines how much banks pay for overnight borrowing from a “depositary institution,” such as the Federal Reserve Bank. By raising this rate, it lowers spending and helps reduce the likelihood of inflation by tamping down costs, along with pushing up interest rates for lenders.

Another tool is the Fed increasing its Reserve Requirement. By increasing this metric, it slows down spending, and therefore inflation by how much money institutions can lend out.

The third is through open-market operations (OMO), whereby the Fed can either buy U.S. Treasury Bonds to increase the supply of money or sell U.S. Treasury Bonds to decrease the money supply.

The Fed uses the Personal Consumption Expenditures (PCE) Index from the U.S. Bureau of Economic Analysis, along with the Depart of Labor’s Consumer Price and Producer Price indexes, to gauge inflation.

Understanding Cost-Push Inflation

According to the Federal Reserve Bank of San Francisco, there are a few ways to quantify inflation. Cost-push inflation happens when inputs necessary for manufacturing cost more. This can include input resources that cost more or worker pay that rises quickly. During the energy price spike during the 1970s, the increased cost of fossil fuel increased production and commercial hauling costs.

Wage-Push Inflation

According to the Monthly Labor Review, the Bureau of Labor Statistics, the Federal Reserve Bulletin and the American Economic Association, wage-push inflation is the “thesis” that argues employee pay has risen faster than actual good or service output and is squeezing profitability and price attractiveness to consumers.

One reason this occurs is due to a minimum wage mandate. Another reason is to attract better workers or increase their applicant pool. It’s important to know that doing so will increase the money supply in the economy, which will help them purchase more and create a higher demand for goods. This will further increase the price of goods, whereby businesses will charge more for goods to pay higher wages, which will increase the price of goods throughout the economy. It’s all about balancing the wage increases versus the cost of goods.

Demand-Pull Inflation

Demand-pull inflation happens when there’s the classic too much demand but too little supply scenario. It’s often accompanied by an increase in money supply by a loose central bank monetary policy, oftentimes leading to higher prices.

Looking to Commodities

Taking energy, specifically West Texas Intermediate Spot price, due to increasing costs of energy, this sector is projected to do well in an inflationary scenario. Looking at data from the U.S. Energy Information Administration, the price per barrel increased from nearly $45 on Jan. 1 to more than $59 on April 9, to more than $71.55 on June 18 and climbing. Be it stocks, options or futures, investors who took positions earlier in 2021 or 2020 likely benefitted from inflation.

Performance May Vary by Asset

However, it’s important to select the right assets to decrease the likelihood of losses and increase the chances of gains. For example, fixed income, in conjunction with higher interest rates, is likely to decline due to not staying competitive with inflation rates. Using the “discounted cash-flow method” to evaluate a stock, especially in periods of higher interest rates, growth stocks fare worse compared to their value counterparts. When investing in dividend paying stocks, these may provide a hedge against inflation because they oftentimes can pass on higher costs for their products, keeping their earnings in line with growth expectations, along with receiving dividends themselves.

While the future of the market can’t be predicted, paying attention to how the economy reopens and the Fed manages inflation can help determine what investments are the best going forward.

Wishing on a Star: Investors Pour Billions in to SPACs

Wishing on a Star: Investors Pour Billions in to SPACsA SPAC is a special purpose acquisition company. It is typically sponsored by a venture capitalist or a private equity firm that has expertise in a specific sector or industry, such as green technology. A SPAC launches as an IPO, but it is nothing more than a shell company that raises money from investors. Post-IPO, it has a limited amount of time (one to two years) to merge with an existing company, where the capitol is deployed. Once that happens, the private operating company trades publicly under the SPAC name.

While SPACs have been around for about 30 years, they’ve only become popular in the past year or so. In fact, this year investors have already poured more than $100 billion into these vehicles, and that’s more than the total amount raised since they were first introduced. SPACs offer investors the opportunity to buy into a startup, which might be at early-, middle- or late-stage development when it partners with the SPAC. In 2020 and 2021, industries heavily represented by SPACs include electric vehicles, consumer-oriented technology, communications and retail.

What makes the SPAC particularly interesting is that investors do not know what company they are buying into since the entity has no commercial operations of its own. As such, they are sold largely based on trust in the management sponsor and belief in the growth potential for the industry it represents.

SPACs differ from traditional IPOs in that the IPO price is not based on the valuation of an existing business. Instead, investors typically pay $10 per common share of regular stock at the initial offering. These shares are referred to as units. Each unit also includes a warrant, which offers the right to purchase the company’s stock at a specific price and at a later date. Once a SPAC merges with a private company, the shares and warrants are listed and publicly traded on the stock exchange. Capital raised by the sale of warrants is typically used to compensate the SPAC sponsor.

One of the appeals of the SPAC model is that individual investors have the opportunity to invest in a startup that has been vetted and funded by an experienced private equity partner. This presents less risk as well as a ground-floor opportunity that is usually not feasible for individual investors. Most IPO opportunities require higher capital investments and occur at a later stage of development. SPACs provide the opportunity to commit a smaller investment at an earlier stage in a company’s life cycle, which often offers the potential for higher returns.

Unfortunately, the lack of a longer, established track record also increases risk – which is something the Securities and Exchange Commission (SEC) is currently scrutinizing. For now, the SEC has taken a hands-off approach, hoping the market will regulate itself. However, if SPAC sponsors oversell the entity’s capabilities or investors become disillusioned with the returns on their investment, the SPAC market may be subject to considerable regulation in the future.

As for investment returns, the outcomes are mixed. Initial SPAC IPOs tend to outperform the S&P 500. However, once SPACs merge with their respective private companies, the results tend to be less impressive. Given their recent surge in popularity, there’s no way to gauge their long-term performance success. 

5 Tips for Going Back to the Office

5 Tips for Going Back to the OfficeSlowly, our world is changing. A percentage of the population has been vaccinated and many employees are headed back to the office. However, this may cause a bit of anxiety – and understandably so. Here are few ways to help take the edge off of returning to the workplace.

Wake up Earlier

For some of you, working from home might have caused you to shift your office hours. Maybe you’re starting later and staying up later. Whatever your routine, it’s safe to say that generally, office hours are 9 a.m. to 5 p.m. A few days, perhaps a week, before you expect to go back, set your alarm earlier. Each day, baby step it back a few minutes to the time you roused yourself before the shutdown began. Though things might never be the same, at least your re-entry into the work world might feel somewhat familiar.

Prepare the Night Before Your First Day

Along with starting your day earlier, think through everything you need to take with you. Do you drink coffee? Make sure you have a thermos with a hot cup of joe ready to go. Do you eat lunch at work? Make your lunch the night before; or if you prefer microwavable meals, be sure you’ve got all your favs ready to pop into your work bag. Ensuring that you will have sustenance at whatever time you lunch will save you a lot of worry.

Review Your Workplace Protocols

Here we’re talking about rules to keep you safe. Do you need a mask if you’ve been vaccinated? What if you haven’t been vaccinated? Do you need to always wear a mask? Will there be hand sanitizer onsite or do you need to bring your own? Email HR or leadership to be fully aware of the policy so you can keep up-to-date with any changes. Staying informed will help calm your nerves.

Manage Your Stress

Make sure you’re being mindful of how you’re feeling emotionally before, during, and after you return to work. If you’re dealing with anxiety when you’re back at work, practice self-care. Take a walk outside during lunch to get some fresh air. If you like to exercise and your gym is open, plan a quick workout. If for some reason you can’t leave the office, try meditation apps like Calm, Headspace or Simple Habit. (These are also great when you get home and before you go to bed – anytime, actually.) You might also call a friend or family member and share how you’re feeling. Letting off some steam and expressing yourself helps alleviate some of the pressure that might be building up.

Communicate with Your Team

Making the transition back to the office can be challenging, if not downright tough. To diffuse any misunderstandings, practice transparency with everyone, no matter what their position. If you’re a manager, lay out your expectations so that everyone is on the same page. If you’re an individual contributor, make sure your manager and peers know what you’re working on, your hours, and any out-of-the-office days you have coming up. Many companies are asking employees, initially, to split their time between the office and home, which means that for some a full transition back to the office is yet to come. Regardless, overcommunicating will ensure you don’t miss out on anything important.

We may never return to the days before the pandemic. However, we’re making strides to get back to a place of normalcy and are here to guide you every step of the way.


Returning To Work In The Office? 5 Tips To Prepare For The Transition

Audits in Accounting: Improving Audit Quality with Data Analytics

Audits in Accounting: Improving Audit Quality with Data AnalyticsAuditing is crucial to ensure the accuracy and fairness of financial information. However, one of the biggest threats to audit reputation today is data quality. This is because of the large volumes of data that businesses produce today. To deal with so much data, auditors are now turning to data analytics.

Data Analytics and Audits

Technology has played a major role in business growth as it aids in reducing operational costs and improving customer service. As such, many businesses have adopted enterprise resource planning (ERP) systems. These systems result in huge volumes of data, making it nearly impossible to analyze using the traditional audit process.

Auditors are left with no choice but to also use IT-based solutions; and this led to the development of audit software to support the auditors in data extraction and analysis.

To further enhance the workings of audit software, it’s now being integrated with data analytics. Given that data analytics works with structured data, the systems incorporate machine learning (deep learning) to extract useful data from a host of unstructured data.

Although these developments in the audit profession have not changed the primary role of auditors, they have changed how an audit is done by helping produce high quality audit evidence.

How Data Analytics Improves Audit Quality

Traditional audits involve combing through piles of data, which is time consuming. As a result, auditors prefer workarounds like data sampling, which does not give a true outcome.

With data analytics, an auditor does not have to restrict data to financial reporting systems only. Instead, they can use data from multiple complete data sets, such as sales statistical data and employee and customer master data. This enables an auditor to go beyond traditional audits that target limited data and include different audit relevant data.

Using data analytics tools, auditors look for predefined patterns that help reveal ambiguous relationships between variables that a manual system might not identify. This helps facilitate a more comprehensive decision that includes all data sets.

By integrating data analytics, auditors have access to a powerful tool that helps them better understand a business. As a result, they can easily identify key audit risks, provide deeper insights into a business’ systems and controls, detect fraud, and provide value in a less costly manner.

Apart from simplifying and speeding up the audit process, data analytics also enables auditors to focus on key risks.

The capabilities of data analytics continue to evolve to the point of automating the auditing process through advanced data analytics (ADA). This enables the automation of routine audit processes, allowing the auditors more time for matters that require professional judgment.

Challenges of Audit Data Analytics

Audit data analytics isn’t without a few challenges, one of which is data exchange between a business and an auditor, whether internal or external. This is in relation to different systems used in data collection. To handle this challenge, the AICPA introduced data standards to be used for data requests and to ensure production of standard reports from the ERP systems.

Another challenge is the integrity of data fed into the analytics systems, as this determines the quality of the end results. Systems used should be designed around collecting meaningful data. Auditors must also ensure that the conclusions fed into the systems are accurate and correct.  

Although data analytics reduces the sampling risk, it introduces the challenge of getting numerous exceptions, mostly referred to as outliers, that produce results outside audit expectations. This calls for auditors to investigate the exceptions/outliers to determine if they are errors or misstatements.


Integrating data analytics into the audit process greatly improves audit quality and credibility. With rapid advancements in technology, the capabilities of data analytics will continue to evolve, making auditing work even more efficient while maintaining high quality.

Although the adoption of data analytics is dependent on the size of a business, availability of skilled staff is also crucial. To remain relevant in a fast-changing environment, auditors need to advance their skills to effectively use the data analytics tools.

Recognizing the Abolishment of Slavery and Compensating Law Enforcement, Overseas Federal Employees and Disaster Relief Victims

Recognizing the Abolishment of Slavery and Compensating Law Enforcement, Overseas Federal Employees and Disaster Relief VictimsJuneteenth National Independence Day Act (S 475) – This bill authorizes Juneteenth National Independence Day on June 19 as a legal public holiday. The bill was introduced by Sen. Ed Markey (D-MA) on Feb. 25. It was passed by both the House and the Senate on June 16 and signed into law by the president on June 17.

Protecting America’s First Responders Act (S 937) – This bill was introduced by Sen. Chuck Grassley (R-IA) on April 29. The legislation ensures that certain law enforcement and first responders who have become permanently and totally disabled as a result of personal injuries sustained in the line of duty have prompt access to specific payments and benefits. The bill passed in the Senate on June 10 and is currently under consideration in the House.

HAVANA Act of 2021 (S 1828) – This bill provides financial support and resources for American officials suffering from the so-called Havana Syndrome – a mysterious set of symptoms that first affected federal employees stationed in Cuba in 2016. The bill authorizes disability benefits to American personnel who have experienced qualifying anomalous health incidents while serving in other countries throughout the world. The legislation was introduced by Sen. Susan Collins (R-ME) on May 25 and passed in the Senate on June 8. It is currently under consideration in the House.

Preventing Disaster Revictimization Act (HR 539) – Introduced by Rep. Sam Graves (R-MO) on Jan. 28, this bill would prevent the Federal Emergency Management Agency (FEMA) from taking back disaster assistance funds that it mistakenly awarded to victims who applied for assistance in good faith. Under current law, FEMA can go back weeks, months or even years to seek repayment of funds in cases where the agency subsequently determined it mistakenly granted assistance, but no fraud was committed. This bill would require FEMA to waive that disaster relief debt. The legislation passed in the House on June 15 and is in the Senate for consideration.

United States Innovation and Competition Act of 2021 (S 1260) – This bill establishes a Directorate for Technology and Innovation in the National Science Foundation (NSF) for the purpose of strengthening U.S. leadership in critical technologies. The legislation authorizes investments in research, development and manufacturing in key technology focus areas, such as artificial intelligence, high performance computing and innovation to support national security strategy. The Office of Science and Technology Policy is to develop an annual strategy for the federal government to improve national competitiveness in science and research, and help grow critical industries to generate jobs for the future. The bill was introduced by Sen. Chuck Schumer (D-NY) on April 20 and passed in the Senate on June 8. It is currently under consideration in the House.