If you get RSU awarded to you by your employer, don’t forget to thank on this thanksgiving. Well when I received, I did not know what to make out of it and if you happen to be a Common Man like me, this article is for you. It is also quite common for employers to be issuing RSUs these days than Stock Options as these units are profitable to both and it makes an employee be An Owner too. For any corporation to succeed in my terms, the win is already made once every employee starts taking active role as an owner (off course it could lead to power play but I am not talking that here).
What is RSU?
Restricted Stock Unit is a company stock that is granted to an employee by the employer. However, the exercise of which is restricted by the vesting requirement. To me this is a great benefit as it makes me “John Smith” own a part of the company by virtue of my hard work and good faith of my employer. Restriction in these units are nothing more than vesting requirements defined by employer and verified by SEC. Normally these requirements are either “Time Based” or “Performance Based”. Consider this as an award and be thankful.
What is an award?
Well now that you have been granted RSU and considering all requirements are met to be a beneficiary, award can come in term of stock units or cash. It is upto the employer to determine the best form of award.
How is it better than stock option?
Let’s consider this, you got a stock option with strike price of $10 and it is vested over 4 years. The first year stock is trading unfortunately @ $5, good luck to you as even God can’t help you, if you have need to sell so you can make some money to pay for Haverty’s furniture. Now consider RSU in the similar circumstances, you need to thank your stars as you still got $5 every unit. Off course, it could have been better but God is great and he will compensate you in other forms.

Don’t forget to thank this thanksgiving!