My first batch of RSUs with my employer vested yesterday, 11/1. We also reported our Q2 earnings and unfortunately the stock dropped about 15% in pre-market trading.
Even more unfortunately, the stock price used in the FMV calculation was the closing price the previous day. But the shares sold to cover taxes were sold on the market during the day, at the 15% lower price. The result? In order to withhold ~30.5% of my grant to cover taxes*, 36% of my shares ended up being sold.
This is not my first go-round with RSUs, and at my previous employer who issued them, this never came up. The price used for FMV was also close to, if not exactly, the price used to sell-to-cover. This was 8+ years ago, but I looked at a couple of my old tax returns to confirm that the transactions listed on Schedule D for the STC action always showed a small loss of exactly the trade confirmation.
This morning I started digging through the legalese in my company's plan documents to see if I have any recourse. Based on a couple of sections that I found, it seems that they should have used the closing price on 11/1 (the lapse or vest date) for the FMV calculation, but our stock plan administrator says it is the previous day's close. I don't see that anywhere explicitly specified.
Pretty pissed off because the income number (shares X the higher price on 10/31 close) is taxed as wage income. I do realize that STC transaction will incur a big capital loss, but it still doesn't make up for the additional tax paid and shares sold.
Anyone been in a similar situation?
Admittedly I'm getting way too worked up over this, given that I still just got a big chunk of money. But pedantry is one of my hobbies so I'm just trying to keep my blood pressure low while I "discuss" the situation. I doubt anything will change, but I really with they would give us more control over the tax situation. We are not allowed any other option besides sell-to-cover, despite most RSU plans allowing several options (e.g. sell all at vest date, provide cash to cover the taxes, etc.)
*the ~30.5% number is odd; it would have been a flat 34.75% to cover federal, state, and FICA, but I was already just short of the SS max for the year so it ended up being a weird number.