If you work at The Coca-Cola Company, you may be eligible for a variety of long-term incentive awards. TCCC offers:
- Restricted Stock Units
- Growth-Share Units
- Stock Options
Stock options are a common way for large and small companies to incentivize employees to stick around for the long-haul in order to get a portion of their compensation. Stock options go above and beyond your annual salary. And they can be an important part of your retirement planning as a Coke employee.
Typically, you receive a stock option plan as an upper-level employee. Depending on the type of stock options you have, you’ll usually be able to exercise them (or “cash them in”) after a set period of working with your employer. When you exercise your options, you’ll have the ability to sell them or hold them, depending on what makes the most sense for your financial plan.
Let’s dig deeper into what The Coca-Cola Company offers their employees, and what you can expect from your stock plan.
Who Is Eligible?
In 2018, Job Grades 14-17 became eligible to receive Long Term Incentive awards including RSUs, GSUs, and Stock Options. Remember, just because you are job grade 14 or over doesn’t necessarily mean stock options are part of your compensation package.
What If You’re Under Job Grade 14?
If you’re an employee at Job Grade 10-13, you may still be eligible for some kind of award! Emerging Talent Retention Awards are available to Job Grades 10-13. These awards are comprised of 100% restricted share units.
Restricted Stock Units (RSUs) are a commitment from The Coca-Cola Company to offer company shares to their employees. However, RSUs aren’t immediately available to the employees who receive them. Here’s how they work:
When you’re given RSUs by your employer, they’re issued according to a vesting schedule. Coca-Cola employees are subject to a three-year vesting schedule. So, at the end of the three years, your RSUs fully vest and become available to the employee to sell or hold.
When RSUs vest, they’re immediately subject to ordinary income tax. If you sell your RSUs when they vest, you only pay ordinary income taxes. However, if you hold your RSUs to sell after the value of your stock grows, you’ll pay ordinary income taxes and capital gains tax. At The Coca-Cola Company, you’ll receive RSUs based on a percentage of your base salary, and the value of your RSUs aren’t dependent on business performance metrics.
Growth Share Units (GSUs) are similar to RSUs, but are dependent on business performance metrics. Your GSUs vest three years after the award is granted to you (the employee). However, when the three-year vesting period is over, the value of your shares are calculated based on:
- Earnings per share (⅓ of total value)
- Net revenue growth (⅓ of total value)
- Free cash flow (⅓ of total value)
Stock Options at Coca-Cola
Employee stock options (ESPPs) differ from RSUs and GSUs in that they aren’t granted to employees free of charge. Instead, employees have the option to buy into company shares at a predetermined, discounted rate after a vesting period. Your stock options vest 25% at a time over four years of employment with The Coca-Cola Company.
The important thing to remember about stock options at Coca-Cola is that your options only have value if the value of The Coca-Cola Company shares increase. You’re able to “exercise” your options at the end of the vesting period at the predetermined value that was granted to you at your award date. If the company’s stock value has decreased since your award date, your options may not have value.
Remember that, if you run into a situation where your company stock has decreased in value since your award date, you aren’t obligated to sell. You can always continue to hold your stock options for longer until the current stock price rises above what your options are valued. In fact, when your stock options vest, you have up to 10 years to exercise them.
Waiting may also be in your best interest from a tax perspective. If you sell less than a year after your stock options vest, you may be subject to hefty capital gains taxes and ordinary income taxes. If you sell after holding your options for more than a year, you may be able to qualify for much more favorable long-term capital gains taxes.
Leveraging Your Options
Any time stock options are part of your financial plan, it’s wise to seek a professional’s opinion. You want to ensure that you’re maximizing the awards that are made available to you without hurting yourself from a tax perspective.