Performance Stock Units (PSU)
Performance stock units are shares that vest only if pre-set performance goals are met over a multi-year period — the most common vehicle tying CEO pay to metrics.
How they pay
PSUs are granted with target metrics (EPS, TSR vs peers, strategic goals) and a payout curve: typically 0% below threshold, 100% at target, up to 150-200% above maximum. The number of shares actually delivered is fixed only after the performance period ends and results are certified.
In the SCT, PSUs are valued at grant-date target (or, where payout below target is probable in a modified-plan accounting sense, at that estimate). In CAP, they are re-valued each year — which is a large part of the CAP-vs-SCT divergence.
Frequently asked
What is a PSU multiplier?
The factor applied to the target share count based on final performance — e.g. 0% at threshold-miss, 100% at target, 200% at maximum. The proxy's outstanding-equity-awards table shows threshold/target/maximum share counts for each grant.
Related terms
Next term: Restricted Stock Units (RSU) (11 of 15)