Restricted stock units (RSUs) and restricted stock awards (RSAs) are forms of equity compensation that companies grant to employees. While both reward employees with company stock, they work a bit differently and have different tax implications:
1️⃣ With an RSA, the employee owns the underlying shares as of the grant date. However, those shares can only be sold or transferred after certain vesting conditions — such as time or performance milestones — are met.
2️⃣ An RSU gives the employee the right to receive shares in the future, once they satisfy the required vesting conditions. The employee does not own any shares on the date of the grant.
3️⃣ Vesting conditions for RSUs or RSAs often include length of employment, achievement of company or individual performance goals, or other agreed-upon milestones.
If you’re researching what are RSUs and RSAs or how equity compensation works, understanding the differences between these two stock awards can help employees and investors make smarter decisions about their compensation and tax planning.
Building Blocks: Types of Securities
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