A grant date is the specific date that some type of award or investment option is granted to an individual investor. The grant itself may be in the form of employee stock options bestowed by an employer, some type of restricted stock awards that are presented as part of limited time issue, or even some type of grant or award that is presented in response to some special favor or support rendered to the issuer. The grant date is important, since it establishes the exact date that the grantee takes ownership of the asset and is entitled to begin earning dividends, interest, or some other type of return from that ownership.
When it comes to some sort of employee stock option plan, the grant date is important in terms of establishing the exact date that the employee begins to vest in the plan and accrue interest in a retirement or other program. For example, if the retirement plan associated with the business is an Employee Stock Ownership Plan (ESOP), the grant date serves to identify the date that vesting with the issued shares of stock began. Typically with an ESOP, there is a specific grant date each year in which the employee is vested with ownership in a certain number of shares, based on his or her wages or salary for the previous annual period.
In some cases, the grant date is connected with the award of shares of stock, either as a gift to the recipient, or as a one-time award to a valued employee. Here, the grant date helps to establish the exact date that the ownership of those shares was received by the new owner. From that date forward, the recipient is eligible to receive dividends generated by those shares, with the issue of those dividends scheduled based on the terms and conditions inherent in the stock issue. In addition, the grant date also establishes the exact date that the new owner becomes responsible for any tax liabilities associated with the ownership of those securities.
The grant date is simply the point at which the new owner of the shares receives full ownership and begins to receive benefits from the possession of those securities. In some cases, that ownership must remain in place until specific events should take place, such as the sale of the issuing company or the owner of the shares reaching retirement age. At other times, the award of the shares is extended with no restrictions on when or how the new owner may sell the securities, making it possible to enjoy the benefits of owing the shares for as long as desired, then sell them when and as the owner determines.