Restricted Stock Unit ⬆️⬇️

How a public company awards long-term incentives using equity

Published: Wednesday, Dec 21, 2022 Last modified: Monday, Dec 9, 2024

Imagine you are awarded 1000 RSUs as part of an annual equity compensation process.

If we looked up the relevant NASDAQ stock ticker and the price was 10USD, that means the current value is 10000USD, however you can’t cash that in!

The restricted stock units vest over four years, 25% at the end of each 12 month increment.

Example:

If your employment ends for any reason then any unvested RSUs are automatically forfeited.

So essentially you must stay in employment to get ~2500 USD next year in November 2023 and so forth.

Of course the value of the unit could go up or down.