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Originally Posted by CaptainCrunch
Dumb question. How would that work if the CEO takes a low salary and the rest in Stocks.
And then what would happen if the CEO takes a loss on the stocks.
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Not a dumb question.
Depending on how long you hold the stock, and certain elections you make at the time of granting, the stock can be taxed as a capital gain which is a lower tax rate.
Which here in the US is very controversial, since generally it's people with more money that get awarded stocks or stock options and it's an income tax reduction opportunity not available to people in many jobs.
If you get a $1 million award in stocks and then the stock devalues to $700K and you sell it, you ultimately pay tax on the $700K but depending on passage of time and the elections you made, the tax rates and timing of your tax would vary.
I don't know if I explained that very well.
And stock options will be a little different but in the big scheme of things, you should end up paying tax on what you ended up with in your pocket. But being taxed as a capital gain is very favorable compared to ordinary income.