Process: EOY Tasks for Stock Grants

What

This guide documents the administrative steps needed to make sure that a restricted stock grant is correctly reflected in an employees year-end W2, and that all applicable taxes are paid.

When

This process should be followed whenever an restricted stock grant is made, which may be because it’s part of a compensation package for a senior hire.

Who

• A Justworks Administrator
• Person overseeing payroll

How

1. Determine the fair market value (FMV) of the stock grant. Refer to Cap Table documentation. The FMV is the number of shares x FMV per share as determined by the 409A valuation applicable at the time of award.
2. Record a fringe payment in Justworks. Enter the FMV of the stock grant as a fringe benefit payment amount.
3. Create a bonus payment to cover the tax: Calculate the tax withholding for the FMV. Justworks will automatically deduct this amount from the pay cycle when the fringe benefit appears. Enter the tax withholding amount as the NET bonus amount and select the option to take no additional deductions.

Resources

• Equity-based pay in Justworks Help pages