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What discloses a company's promise to pay shares based on a vesting program?a.Non-Qualified Stock Options (NSOs)b.Performance Sharesc.Incentive Stock Options (ISOs)d.Restricted Stock Units (RSUs)

Question

What discloses a company's promise to pay shares based on a vesting program?a.Non-Qualified Stock Options (NSOs)b.Performance Sharesc.Incentive Stock Options (ISOs)d.Restricted Stock Units (RSUs)

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Solution

To determine which option discloses a company's promise to pay shares based on a vesting program, let's analyze each choice:

a. Non-Qualified Stock Options (NSOs): These are stock options that do not qualify for special tax treatments under the IRS code. They give employees the right to buy company stock at a set price after a certain period, but they do not represent a promise to pay shares directly.

b. Performance Shares: These are shares given to employees based on the achievement of certain performance goals. They are typically part of a performance-based compensation plan, but they are not necessarily tied to a vesting program.

c. Incentive Stock Options (ISOs): These are stock options that qualify for special tax treatment if certain conditions are met. Like NSOs, they give employees the right to buy company stock at a set price after a certain period, but they do not represent a promise to pay shares directly.

d. Restricted Stock Units (RSUs): These are company shares promised to employees, which are delivered once certain conditions, such as vesting periods, are met. RSUs are a direct promise to pay shares based on a vesting schedule.

Based on the analysis, the correct answer is:

d. Restricted Stock Units (RSUs)

This problem has been solved

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