- 144
- SEC Rule 144 is a means by which restricted and control securities may be sold in compliance with federal law and regulations. Rule 144 requirements depend upon who owns the security, the length of time it has been owned, and how it was acquired. Rule 144 applies to the resale of restricted securities as well as to restricted and non-restricted securities sold by control persons. To sell the security, some or all of these requirements must be met:
- The issuer must be in compliance with SEC reporting requirements
- A holding period of one year must have been met by the shareholder. However, a control person may sell unrestricted securities without regard to the holding period. Volume restrictions still apply.
- The amount of stock sold in any 3-month period does not exceed the volume limitations which are the greater of 1% of the outstanding shares or the average weekly trading volume for the 4 calendar weeks preceding the filing of a Form 144 notice. A Form 144 notice must be filed in certain transactions.
- The stock must be sold in a broker’s transaction or a transaction with a market maker. Solicitation of purchasers is prohibited.
- 145
- Sets forth conditions for selling securities, which are the result of SEC registered merger or consolidation. Non-affiliates are not subject to resale restrictions. Affiliates of selling company who do not become affiliates of acquiring company are subject to volume restrictions and public information requirements for the first year, but do not have to file Form 144. During the second year, the only requirement is for the company to be current in all SEC reporting. Affiliates of the acquiring company must abide by all 144 requirements except the minimum holding period.
- 144K
- Securities have this restriction if the securities are restricted but the stock owner is not an affiliate of the company, and the securities were acquired from the company or are affiliate of the company more than 2 years ago. Customers can sell this type of stock without having to satisfy most of the requirements of Rule 144.
- 701 (g)(3)
- Rule permitting the sale of unregistered securities in the open market, provided the shares were issued under a company benefit plan or compensation agreement prior to a company going public. An owner of these securities who is not considered an affiliate of the issuer may sell shares under Rule 701 (g)(3) without having to satisfy Rule 144 requirements. The shares can not be sold until 90 days after the company goes public. However, certain Rule 701 paperwork needs to be completed by the stock owner in order to have the restricted legend removed and to release proceeds from the sale. Affiliates must satisfy all of the requirements of Rule 144, other than the one-year holding period.
- Affiliate
- See Control Persons, Insiders or Affiliates.
- Alternative Minimum Tax (AMT)
- Alternative minimum tax (AMT) is a separate tax system, complimentary to the federal income tax system. The AMT system attempts to make sure that anyone who benefits from certain tax advantages will pay at least a minimum amount of tax.
- Blackout Period
- These are certain times of the year when privileges to exercise your stock options may be restricted. Refer to your stock option plan rules for more information.
- For example, blackout periods often coincide with a company’s fiscal year end, dividend schedules, and calendar year end.
- Capital Gains
- This is earnings from the sale of a security at a higher price than the original purchase price. Also, a specific long term objective for many mutual funds.
- Capital Gains Tax
- This is a tax on profits from the sale of certain assets such as securities and real estate.
- Commission
- The selling or transfer costs of a trade order transaction.
- Control or Restricted Loan
- A margin loan which is secured by control or restricted securities.
- Control Persons, Insiders or Affiliates
- Officers, directors, policy-making executives, major shareholders (generally owners of 10% or more of outstanding shares), and other people who are in a position to directly or indirectly control the management of the company.
- This includes spouses, family members who live with the control person, and other entities affiliated with control persons, as defined in Rule 144. Securities trading by a control person of the issuer is subject to restrictions, regardless of whether the security is restricted. A control person must complete Rule 144 documentation and comply with Rule 144 when selling control securities.
- Employee Stock Purchase Plan
- This is a plan offered by an employer according to which employees have the opportunity to purchase the company’s stock through payroll deductions.
- Estimated Cash Proceeds
- This is an estimate of the proceeds from an exercise and sell order. This estimate shows all proceeds after any estimates for costs or taxes are deducted.
- For an exercise and sell order for incentive stock option, this is an estimate of the proceeds after the estimates for the cost to exercise (e.g., commissions and fees) is deducted.
- For an exercise and sell order for non-qualified stock options, this is an estimate of the proceeds after the estimates for the exercise cost, total taxes (e.g., Federal and state income taxes), and the cost to exercise (e.g., commissions and fees) are deducted.
- Actual cash proceeds at time of order execution may be different.
- Estimated Exercise Cost
- This is an estimate of the total cost, grant price at which you buy the stock options multiplied by the number of options you are exercising, that would be deducted from your proceeds as a result of an exercise order. Actual exercise cost at time of order execution may be different.
- Estimated Gross Sale Proceeds
- This is an estimate of the proceeds from an exercise and sell order. This estimate shows all proceeds before any estimates for costs or taxes are deducted.
- The estimate for the cost to exercise (e.g., commissions and fees) is deducted.
- For an exercise and sell order for non-qualified stock options, this is an estimate of the proceeds before the estimates for the exercise cost, total taxes (e.g., Federal and state income taxes), and the cost to exercise (e.g., commissions and fees) are deducted Actual costs at time of exercise may be different.
- Actual gross sale proceeds at time of order execution may be different.
- Estimated New Cash Proceeds
- This is an estimate of the proceeds from an exercise and sell order. This estimate shows all proceeds after any estimates for costs or taxes are deducted.
- For an exercise and sell order for incentive stock options, this is an estimate of the proceeds after the estimate for the cost to exercise (e.g., commissions and fees) is deducted.
- For an exercise and sell order for non-qualified stock options, this is an estimate of the proceeds after the estimate for the exercise cost, total taxes (e.g., Federal and state income taxes), and the cost to exercise (e.g. commissions and fees) are deducted.
- Actual cash proceeds at time of order execution may be different.
- Estimated Exercise Cost
- This is an estimate of the total cost, grant price at which you buy the stock options multiplied by the number of options you are exercising, that would be deducted from your proceeds as a result of an exercise order. Actual exercise cost at time of order execution may be different.
- Estimated Share Proceeds
- This is an estimate of the proceeds from an exercise and hold order. This estimate shows all proceeds before any estimates for costs or taxes are deducted:
- For an exercise and sell order for incentive stock options, this is an estimate of the proceeds before the estimate for the cost to exercise (e.g., commissions and fees) is deducted.
- For an exercise and sell order for non-qualified stock options, this is an estimate of the proceeds before the estimates for the exercise cost, total taxes (e.g., Federal and state income taxes), and the cost to exercise (e.g., commissions and fees) are deducted.
- Actual share proceeds at the time of order execution may be different.
- Estimated Taxable Income
- This is an estimate of the income on which you would pay ordinary income tax after an exercise and sell or an exercise and hold order for non-qualified stock options executes.
- Actual taxable income at time of order execution may be different.
- Estimated Total Cost
- This is an estimate of the total cost of exercising stock options that would be deducted from the proceeds when an exercise and hold order executes. This estimate is the total of the estimated exercise cost plus the estimated tax amount.
- Estimated Total Options Outstanding Value
- This is an estimate of the total value of the number of stock options that have not been exercised including stock options that are vested and unvested.
- Estimated Total Tax Withholding
- This is an estimate of income tax that would be withheld when an exercise and sell or an exercise and hold order for non-qualified stock options executes. Actual taxes withheld at time of order execution may be different.
- Estimated Value of Options Outstanding
- This is an estimate of the total value of the number of stock options that have not been exercised, both are vested and unvested stock options. This value is calculated by multiplying the market price for the underlying stocks as of the prior trading day’s close by the total number of vested and unvested stock options outstanding.
- Estimated Value of Vested Options/Exercisable
- This is an estimated amount across all of your stock option grants. This value is calculated by multiplying the total number of vested stock options that are exercisable across all of your grants by the spread.
- Estimated Vested Options/Exercisable
- This is an estimate of the number of stock options from those originally granted that have been held long enough for you to have right of ownership and to be available for exercise.
- Exercise and Hold
- A form of stock option exercise in which you exercise your option to acquire shares of your company stock and hold the stock. When you do this, you need to have funds available* in order to pay the exercise cost and required tax withholdings.
*Funds must be available through cash on deposit in your Fidelity Account, or, if you have been approved for margin, available margin to borrow against other securities in your Fidelity Account
- Exercise and Sell
- A form of stock option exercise in which you exercise your option to acquire shares of your company stock and sell the stock immediately. The cash proceeds from the sale are used to pay the exercise cost, required tax withholding, and brokerage commissions and fees. You receive the remaining net cash proceeds in your Fidelity Account. This form of exercise does not require you to provide cash for the exercise.
- Exercise Cost
- This is the cost of exercising your stock options. Exercise cost is calculated by multiplying the grant price by the number of stock options you are exercising. Exercise cost does not include tax withholdings or any fees or commissions that may apply.
- Exercise Date
- This is the date on which you elect to exercise your stock options, the date you “exercised” the stock option to buy shares of the underlying stock.
- Exercise Order Date
- This is the date on which your order to exercise stock options was placed, and not the settlement date of transactions associated with your stock option exercise.
- Exercise price
- The price per share which you must pay to the issuer to exercise the stock option. The exercise price is usually set at the fair market value of the company’s stock on the date of grant. Also called the Grant Price.
- Expiration Date
- The date a stock option contract expires.
- For stock options your company grants you, this is the date according to the terms of your grant agreement with your company and your company's stock option plan after which you can no longer exercise your stock options.
- The expiration date is first determined upon the awarding of stock options. Under certain provisions of the stock option plan and grant agreement, such as a change in employment status, this expiration date may be accelerated.
- Fair Market Value
- The value at exercise of the shares obtained by exercising your stock options. Fair Market Value is specified in your employer's stock option plan and is used to determine the amount of gain that is treated as compensation for Federal income tax purposes.
- On the Exercise Grant Order Entry screen for an exercise and hold order, one of four options is displayed. This option displayed is determined by your company's stock option plan rules. The fair market value will be one of the following:
- Prior Business Day's Close
- Average High and Low for the Day
- Real-time Price
- Today's Close
- Fair Market Value at Exercise
- The price per share for the underlying stock at the time your stock option exercise order was executed. The price per share is based on the fair market value option your company's stock option plan uses. The fair market value at exercise will be one of the following:
- Prior Business Day's Close
- Average High and Low for the Day
- Real-time Price
- Today's Close
- Grant
- The transaction by which your employer awards stock options to you. The terms of your grant are determined by your grant agreement and your company's stock option plan.
- Grant Price
- The price per share which you must pay to the issuer to exercise the stock option. The grant price is usually set at the fair market value of the company's stock on the date of grant. Also called the Exercise Price.
- Grant Type
- This refers to whether a stock option grant is for tax-advantaged incentive stock options or non-qualified stock options.
- Holding period
- For stock option grants, this refers to the amount of time stock options must be held before they can be exercised. The holding period requirements for stock options are described in the vesting schedule for your stock option grant.
- Incentive Stock Options (ISO)
- A stock option is the opportunity, granted to you by the issuer (e.g., your company), to purchase a certain number of shares of your company's common stock at a pre-established grant price over a defined period of time.
- ISOs meet the IRS requirements for special tax treatment. With ISOs, you do not have to pay regular income taxes at the time you exercise your stock options if you hold your shares the later of one year from the date of exercise or two years from the date the stock options were granted, the waiting period.
- If you decide to sell your stock option shares after the waiting period, you will be subject to a capital gains tax on the difference between the sale price and the grant price.
- If you sell your shares prior to or on the one year anniversary of the date on which the shares were granted, the shares you sell are subject to a disqualifying disposition which means that, generally, you will be required to pay income tax on the difference between the fair marker value at the time you exercise the stock options and the grant price.
- If you exercise the stock options prior to the two-year anniversary of the date on which the stock options were granted, hold them, and then sell them between the one-year and two-year anniversary on which the stock options were granted, you pay short-term capital gains on the difference between the fair market value on the date you sold the shares and the grant price.
- If you choose to sell your shares on the same day as you exercise them, Fidelity will withhold the stock option cost and send it to your company.
- Issuer's Stock
- This is share of stock that gives you ownership in a company.
- Issuer's stock and the grant of stock options differ in that a grant of stock simply gives you the right to purchase shares of the underlying stock during a predefined period time and at a pre-established price, the grant price.
- Lockup Agreements
- Lockup agreements prohibit company insiders, including employees, their friends and family and venture capitalists, from selling their shares for a set period of time. Lockups may also limit the number of shares that can be sold over a designated period of time.
- Market Capitalization ($ millions)
- In a Company Profile, the last closing share price times the latest number of shares outstanding.
- Non-qualified Stock Options (NSO)
- A stock option is the opportunity, granted to you by the Issuer (e.g., your company), to purchase a certain number of shares of your company's common stock at a pre-established grant price over a defined period of time.
- NSOs do not meet certain IRS requirements that allow you special tax treatment. With NSOs, you are taxed when you exercise the stock options. You pay ordinary income and Medicare taxes and are subject to social security tax if you have not paid the yearly maximum on the difference between the fair market value at exercise an the grant price.
- Option
- A right to buy or sell shares at a guaranteed price for a specific period of time.
- Optionee
- Anyone who has been granted stock options and still holds them.
- Option Grant
- Refer to Grant.
- Option in the Money Amount
- This refers to a gain in an option contract you hold. For a:
- call option, a gain occurs when the underlying security's current market price is greater than the option contract price
- put option, a gain occurs when the underlying security's current market price is less than the option contract price.
- Plan Number
- This is the number of your company's stock option plan. The plan number differs from the grant ID in that your company will have one stock option plan and corresponding plan number but may have many grant IDs, one for each award of stock options.
- Preview Exercise Button
- Displays the details of a stock option exercise order you just entered so that you can verify the order information before placing the order with Fidelity.
- Prior Business Day's Close
- This is a fair market value option that displays on the Exercise Grant Order Entry screen for an exercise and hold order. This value means that your stock option plan uses the stock's prior trading day's closing price to calculate the:
- Taxable gain
- Withholding taxes for non-qualified stock options
- Alternative minimum tax (AMT) for incentive stock options
- Public Offering
- This refers to the offering of stock to the investment public. This occurs after Securities and Exchange Commission regulatory regulations have been satisfied. The offering is usually made by an investment banker or syndicate, group of financial institutions, on behalf of the issuer (e.g., the company that wants to sell its stock to the public).
- Qualifying Disposition
- A stock transaction that meets certain IRS requirements for preferential tax treatment.
- Real-time Price
- This is a fair market value option that displays on the Exercise Grant Order Entry screen for an exercise and hold order. This value means that your stock option plan uses the market price for the stock at the time your exercise order executes to calculate the:
- Taxable Gain
- Withholding taxes for non-qualified stock options
- Alternative minimum tax (AMT) for incentive stock options
- Registered Sale of Securities
- Indicates the company issuing the securities has done so in a manner that meets the requirements of the Securities and Exchange Commission to offer and sell the shares to the general public. Securities offered in a registered offering are typically traded in the open market and are not subject to the rules that govern restricted securities.
- Registration Statement
- This is a statement that is required by the Securities and Exchange Commission for any securities that are to be sold to the public. The statement provides information about the company issuing the securities (e.g., financial information, company operations and management, other information that should be disclosed to anyone who would purchase shares of the security, etc.).
- Restricted Securities
- Restricted securities are stocks, warrants or other securities that are acquired directly or indirectly from a public or private company or from an affiliate of the company (for example, a gift), in a transaction that is not registered by the SEC, also known as a private offering. For example, restricted stock can be acquired through corporate mergers, exercise of stock options, as bonus shares, or as compensation for services provided, but not through a public offering.
- Restricted securities are stocks, warrants or other securities that are acquired directly or indirectly from a public or private company or from an affiliate of the company (for example, a gift), in a transaction that is not registered by the SEC, also known as a private offering. For example, restricted stock can be acquired through corporate mergers, exercise of stock options, as bonus shares, or as compensation for services provided, but not through a public offering.
- Restricted securities are not registered with the SEC and can usually be identified by a legend on the stock certificate restricting the manner of the sale. Sale of the shares will depend on how and when the securities were acquired. Sometimes there is a contractual restricts, such as a lock up agreement, which further restricts the resale of the stock.
- Restricted Stock Award
- A Restricted Stock Award is a grant of stock by an employer to an employee in which the employee's rights to the shares are limited until the shares "vest" and cease to be subject to the restrictions. Typically, the employee may not sell or transfer the shares of stock until they vest – frequently a defined period of time – and forfeits the stock if the employee's employment terminates before the stock vests.
- Seasoned Issues
- This refers to stocks that have been traded for a period of time and over that period of time have gained a reputation for quality with the investing public and experience steady trade volumes in the stock markets.
- Settlement
- This refers to the point at which a broker either pays for the securities bought by an investor or receives payment from the investor that brought the securities.
- Share Proceeds
- This is the number of shares you hold after an order to exercise and hold stock options executes and after the exercise cost, commissions, fees, and any taxes that are due as a result of the order have been deducted.
- Shares
- This is a representation of ownership in a company or mutual fund through shares an investment purchased or stock options that were exercised. In account history, this is the number of shares that were brought or sold when a transaction executed.
- Shelf Registered Stock (S-3 or S-8)
- Securities may be registered on a “shelf registration statement” with the SEC. Registration is limited to the amount of shares expected to be sold within a reasonable period of time after the initial date of registration. Shelf registered securities will be covered by a prospectus which must be delivered at the time of the sale. The company must be current on all required SEC filings to keep shelf registration current.
- Stock Option
- A contractual right that a corporation grants to an individual so that he/she may purchase a specified number of shares of stock at a specified price for a specified period of time. In general, there are two types of stock options, incentive stock options (ISO) and non-qualified stock options (NSO).
- Stock Option Plan
- A contractual document between the employer and the employee that sets forth the rights and obligations of the holder of a stock option plan.
- Stock's Full Name and Symbol
- The ticker or exchange symbol used to identify the stock and the name of the stock's company.
- Stock Swap
- This is a form of stock option exercise in which you exercise your option to acquire shares of your company stock by exchanging shares of a stock you currently own instead of cash to pay the exercise cost.
- Today's Close
- This is one of the fair market value options that displays on the Exercise Grant Order Entry screen for an exercise and hold order. This value means that your stock option plan uses the price for the stock as of the market close on the day your stock exercise order executes to calculate the:
- Taxable gain
- Withholding taxes for non-qualified stock options
- Alternative minimum tax (AMT) for incentive stock options
- Total Stock Options Outstanding
- The total number of stock options, including stock options that are vested and unvested, that you currently hold. This is the number of stock options you were granted less the number of stock options previously exercised and any stock options that were canceled.
- Total Vested Stock Options/Exercisable
- This refers to the total number of stock options across all of your stock option grants for which you have the right of ownership and that are eligible for exercise.
- Under Water
- A stock option for which the stock option's grant price is higher than the current market price for the underlying stock.
- Underlying Security
- Securities that must be delivered if stock options are executed.
- Unexercised Stock Options
- This refers to a stock option which has vested, but not yet exercised.
- Unexercised Stock Options Account
- This is a stock option plan services account containing information about all of your stock options grants. These grants include those that are unvested and that are vested.
- Unvested Stock Options
- This is an estimate of the number of stock options from those originally granted that have not been held long enough for you to have right of ownership and that are not yet available for exercise.
- Vested
- For stock option grants, this refers to when you have earned the right of ownership and the stock options are eligible for exercise.
- Vested Stock Options/Exercisable
- This is an estimate of the number of stock options from those originally granted that have been held long enough for you to have right of ownership and to be available for exercise.
- Vested Stock Options
- This refers to stock options for which you have earned the right of ownership and that are eligible for exercise
- Vesting
- For stock option grants, this is the process by which stock options become exercisable, usually through the passage of time. Stock options are considered vested when you have the right of ownership and you can exercise the stock options at any time before they expire.
- Vesting Date
- This refers to the date on which your stock options vest. From this date until stock options expire, you can exercise the stock options.
- Vesting Schedule
- This is a schedule of dates on which a specific number of stock options awarded as part of a stock option grant become vested. The vesting schedule for stock options is defined in the grant agreement you sign when you accept a stock options grant.
- For example, if you were granted 1000 stock options on February 1, 2000. The vesting schedule may state that 200 of the stock options will be vested on February 1, 2004, another 200 stock options will be vested on February 1, 2005, another 200 on February 1, 2006, etc.