Restricted Stock Units

Restricted Stock Units, commonly abbreviated as RSUs, are a form of equity compensation representing a company's promise to grant an employee a specific number of company shares once certain vesting conditions, typically tied to continued employment over a defined period, have been satisfied. Unlike stock options, which give an employee the right to purchase shares at a set price, RSUs represent an outright grant of shares once vesting requirements are met, without requiring the employee to pay anything to receive them. RSUs typically vest according to a schedule set at the time of grant, such as vesting gradually over several years, with the employee receiving actual shares, or their equivalent cash value in some structures, as each portion vests. Because RSUs have inherent value as soon as they vest, regardless of whether the company's stock price has increased, they are often viewed as carrying somewhat less risk for employees compared to stock options, which only have value if the stock price rises above the option's exercise price. RSUs are most commonly offered by publicly traded companies, though private companies sometimes offer them as well with specific provisions addressing how and when shares can eventually be sold. The tax treatment of RSUs varies by country, requiring careful consideration for companies granting this benefit to employees located internationally.