What are Restricted Stock Units?

Restricted Stock Units (RSU) is the right to receive from the company, after the satisfaction of vesting requirements, either

 

·        A specified number of shares, or

·        Cash equal to the value of a specified number of shares.

 

Factually it is a promise of the company to transfer stock or its monetary value in the future if all conditions are met. Unlike a restricted stock award, shares are not transferred when an RSU is granted and, accordingly, the RSU is not taxed until it is settled either in stock or in cash. Issuing RSUs instead of restricted stock allows company to delay dilution of its equity. For a receiver it is a way to delay his taxable event.

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