2022 Shell PSP Results

All numbers are estimated/hypothetical, your numbers will vary. Please review EquatePlus and Fidelity for your unique situation.

Full Transcript:

Shell’s 2022 PSP have arrived at Fidelity. Let’s break down what to expect.

First, let’s cover the basics. Shell Performance Share plans, or PSP are awarded to two a subset of employees based on their individual performance. The percentage of employees that receive them and the number of shares I receive are both dependent on and increase with job grade. Now, these are a conditional award, and they’re subject to a three-year vesting period, which is based on company performance.

Let’s look at a hypothetical example. Let’s look at Jane to see how her 2022 PSP vested, Now, Jane was awarded PSP in 2022 based on her individual performance. At that point, Jane was awarded 840 shares because of her job grade. Now, if we fast forward three years to March of this year, those shares have vested, and they vested at a phenomenal 146% vesting factor, meaning that Jane has 1,226 shares vesting.

In addition to that, Shell then adds back in a calculated share quantity based on a notional dividend, assuming the dividends were reinvested. So, the dividend calculation adds another 172 shares. So, she has 1,398 shares vesting. Now, as this is vests, this is considered income, and because it’s a taxable event and income, Shell will withhold some shares for taxes. The amount they withhold will depend on your individual situation.

So, in Jane’s situation we’re going to assume that they withheld 489 shares for taxes, meaning then, that 909 shares showed up into her fidelity account.

Now Jane has 909 shares in her Fidelity account that she didn’t have a couple of days ago. So, Jane needs to understand what do I do with this stock? And is it in my best interest to keep it or sell it? Now, when we look at the tax aspect of it when vesting, this is a taxable event. So, if we assume that the price is 67 or so dollars today, she really only has an unrealized gain of about a dollar a share. So, taxes are not a big consideration. Instead, she should ask yourself if I didn’t already have $61,000 in shell stock, and instead I had that sitting in cash, would I go out and buy $61,000 in shell stock? The way she answers that question should help her determine whether to hold or sell her PSP.

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