You do need to report the sale of the shares for taxes in the current year, even though you haven't sold any of the shares left over. You should receive a Form 1099-B reporting their sale. That is where you make the adjustment to cost basis if the cost basis reported on the Form 1099-B is wrong. In future years when you sell additional shares you also need to adjust the cost basis reported on the Form 1099-B if it does not include the income reported on your W-2 in the current year.
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