TikTok owner ByteDance adjusts share option policy in favour of staff in tax, cash-in arrangements
- US-based ByteDance employees can withhold up to 37 per cent of the vested restricted stock units for tax payments, up from the previous 22 per cent
ByteDance, the owner of popular short video app TikTok, is adjusting its policy on share options so that employees can use less cash to pay taxes and are able to resell their shares faster.
The company recently informed its US-based employees that they can withhold up to 37 per cent of the vested restricted stock units (RSUs) for tax payments, up from the previous 22 per cent, according to two people briefed on the change.
Many technology firms grant staff RSUs as a performance reward or an incentive to stay with the company, which will be vested over the years, thus eligible to be sold. In normal cases, the employer will withhold a portion of the vested units for federal, state and local taxes. However, an employee may pay taxes out of their own pocket if the withheld portion is lower than their tax bracket.
In addition, US-based employees of ByteDance have been told that they can sell 60 per cent of the vested RSUs back to the company after the first year, up from 50 per cent, and the rest will become transactable in equal tranches in the following five years.
The change for US staff will be effective later this year. It is not clear how and when the adjustments will apply to ByteDance employees in other parts of the world.