FREQENTLY ASKED QUESTIONS
Q. What does it mean to “lapse restrictions”?
A. A lapsing refers to removing the restrictions on your RSU award and delivering unrestricted
shares of COP stock into your brokerage account at Merrill Lynch that you can now hold or
Q. Why does my award no longer appear in HR Express after the restrictions are removed?
A. HR Express only reflects awards that remain restricted under the Company’s equity programs.
Q. The terms and conditions of my RSU award shows a grant price of $70 and the stock is now
trading at $60. Does this mean it has no value?
A. No. The grant date price determined the number of RSUs awarded. The grant date price
does not impact the future value nor does it function as a strike price or exercise price that you
would see in a stock option. The value of your RSU award at any given point in time is the
current value of COP stock times the number of units awarded. Once the restrictions are
removed and the unrestricted shares are delivered into your brokerage account, the value
continues to fluctuate with the COP stock price until you sell the stock.
Q. What happens to my RSUs if I leave the company prior to the lapsing schedule?
A. The treatment of your RSUs upon termination depends on the grant, reason for leaving and
timing of termination (see Summary of Termination Rules in the Key Employee Award Terms
Q. At what rate will taxes be withheld?
A. The company will withhold only the shares of stock needed to satisfy the minimum required
tax withholding required by applicable laws and regulations. The withholding tax obligation
includes, but is not limited to, federal, state, and local taxes or applicable non-U.S. taxes.
Q. Will capital gains rates apply to future gains/losses on any shares sold through Merrill Lynch?
A. In general, capital gains rates will apply. In the U.S., your holding period for the stock starts
on the date the restrictions lapse for each increment, not on the date the RSUs were granted.
The cost basis is the fair market value (FMV) on the lapsing date as noted on the confirmation
statement you will receive via mail from Merrill Lynch. Consult your tax advisor.
Q. Will the sale of future shares sold through Merrill Lynch be subject to commissions?
A. Yes, a single per share fee for each transaction will be charged based on the total number of
shares transacted. For additional information on commission rates, please refer to “Managing
Your ConocoPhillips Equity Award Program Account Online” documentation online at
www.benefits.ml.com under “Individual/Plan Information” on the Communications Center tab.
Q. I am 55 years old and have already been notified and have paid FICA taxes on my RSU grant.
Will the tax be withheld again when the restrictions lapse?
A. No, taxes that have already been paid will not be withheld on the lapsing date. Current IRS
regulations require FICA taxes be paid on the value of all restricted stock units when a U.S.
participant no longer has a substantial risk of forfeiture which includes reaching age 55 with 5
years of service under certain RSU programs. In these cases, the company will pay the taxes
on behalf of the employee and recover such payment by payroll deductions over the next six
Q. My salary grade level is 19, 20 or 21. Can I defer the income associated with the lapsing of
my restricted stock units?
A. No, you cannot defer the income associated with the lapsing of the restricted stock units.
Although, as a matter of policy, we cannot offer tax advice, in future years, you may want to
consider deferral of salary or VCIP equal to the estimated taxable income from the RSUs.
Consult your tax advisor.
Neither Merrill Lynch nor ConocoPhillips representatives provide tax, accounting or legal advice. Any
tax statements contained herein were not intended or written to be used, and cannot be used for the
purpose of avoiding U.S. federal, state or U.S or International local tax penalties. Please consult your
own independent advisor as to any tax, accounting or legal statements made herein regarding the tax
liability arising from an RSU award grant and delivery.
The material in this letter is intended to be accurate, but if there is any discrepancy between this
material and the official Terms and Conditions of the award, the official Terms and Conditions will