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Restricted Stock Units

Restricted Stock Units (RSUs) are shares-to-be, meaning they don’t become official company stock options until a vesting period has been satisfied. The intent of RSUs is to keep an employee’s interest in their company stock, even though the employee holds no value at that time. Only once the vesting period ends, do RSUs contain any value for an employee.

How it Works

Once that vesting period is completed, the RSUs morph into company stock and they are assigned a fair market value. Then RSUs are now considered income and, of course, subject to taxation. This tax is paid by a portion of the RSUs held back by the company and the remaining shares issued to the employee. Once an employee receives those shares, they can sell them at their leisure.

Want to Learn More?

There are many different advantages and disadvantages to RSUs. If you’ve been offered equity compensation in the form of RSUs (or any other type), please contact me and let’s look at your choices together.

For more information send me a quick email or call the office.

egerhard@barnumfg.com | (203) 513-6331