Restricted Stock Units (RSU)
Restricted stock units are a promise of shares that vest on time or continued service alone — no performance conditions, no options to exercise.
The simplest equity award
An RSU converts into shares (or cash equal to their value) once its vesting schedule completes — commonly 25% per year over four years, or cliff-vesting on continued service. Because there is no purchase price and no performance condition, RSUs retain value as long as the holder stays employed.
In the SCT they appear at grant-date fair value; in CAP they are re-valued at each year-end until vested — same as other unvested equity.
Frequently asked
RSU vs stock option?
An option only pays if the share price rises above the strike; an RSU pays the share value whatever it is. RSUs are therefore the lower-risk award, and dominate at companies with lower-volatility or declining stocks.
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