"According to TP, he did not pay for anything to receive the proceeds as stated on 2021 form 1099-B."

That would be typical of the Escrow process. As I described, that's a release of something already considered theirs, held on their behalf until some condition or restriction has been met. The investment held on his behalf is released, available to be sold, got sold, and he got the proceeds. That's the same as any other investment sale held in escrow.

"The proceeds were not on 2021 W-2 as this is an overseas job/foreign employer."

Nope. "Proceeds" are not part of the W2 reporting process. Proceeds are from the Sale, so that is why there was a 1099-B (outside brokerage used). Basis or value of the award is part of compensation; compensation is a W2 process item. That would appear when it is considered Awarded or the option has been triggered.

"It seems that the date of exercise and date of sale occurred on the same day in 2021."

The exercise of the sale is the decision to sell, instead of hold. Or, are you referring to the award? Do you consider W2 is incorrect? Or was this award amount covered by the W2 in 2017 as an event in 2017?

Because, as I pointed out, it would be typical to award something and not make it available for a 5-year vesting or holding period, so that it is not sellable on the same year it is awarded. That vesting is an example of a restriction.

"TP also said that this 2021 proceeds were not in 2017 wages/income."

Of course not. Again, there is a difference between an award of something as value, as compensation; and the type of award, which was an investment vehicle of some type carrying Basis now that it has been awarded, reported as part of compensation and taxed. Proceeds only follow a Sale.

Basis would be as of the date of the award (2017, it seems, for this person). Specifically, it would depend on the provisions, as some plans are not valued until the award is declared to be the taxpayer's property, which can be later than notification of the award as an option. It depends on the type of event. If there is no valued basis until it was also sold (in 2021), then why is anything on the W2 for 2017? See the conflict?

Proceeds reflect that instead of holding it, the taxpayer opted to Sell it. That results in Proceeds, which is 1099-B for 2021.

Escrow indicates something was not freely available for the taxpayer to do whatever they wanted whenever they wanted to whatever this was, whenever this was.

"It is strange because TP did not have enough fact/paper trail."

Again: is the 2017 W2 amount for this activity enough that it covered the value at that time of all Awarded rights? There should be a quantity somewhere related to this event; not just amounts.

Let's try this example scenario one more time:

Something is awarded and that value is Compensation for that year = W2 reporting. There might also have been a sale, proceeds of which are reported on 1099-B, such as fractional shares or some amount to help cover bonus withholding. This would be the type of thing that happened in 2017, and established Basis.

5 years later, vesting is established, and the taxpayer doesn't have to sell, but did so. Or, that acquisition ended up with the staff having no option but to sell the released shares. Perhaps, for instance, the acquiring employer was the buyer of the shares in an agreement that wraps up the purchase of the prior entity, keeping those shares off the open marketplace. So now, in 2021, there is no New Compensation (no new awards). There is a Sale on behalf of the taxpayer, triggering the 1099-B.

All of this is speculation on my part, but this is not an unusual situation in that sequence of events.

No one on the internet can compensation for what the taxpayer doesn't know about their employment activities. Have you searched the web on that/those employers, on this acquisition, do you have a broker relationship who can look back in their archives for what happened and can help understand what paperwork your taxpayer has available? For instance, a Montana company was bought by ARCO who got bought by BP. It's hard to navigate, but all the details exist in the public domain.