What is the difference between Rsu vs Stock Options?
Career: Rsu
| Aspect | RSU (Restricted Stock Unit) | Stock Options |
|---|---|---|
| Ownership | Actual shares granted upon vesting | Right to purchase shares at a set price |
| Taxation | Taxed as income upon vesting | Taxed at exercise and sale |
| Vesting | Typically gradual over time | Requires exercise after vesting |
| Value | Value depends on stock price at vesting | Potential for higher gains if stock price increases |
RSUs and stock options are both equity compensation tools used by companies to incentivize employees. RSUs provide actual shares once vested, offering immediate value, while stock options give the right to buy shares at a fixed price, with potential for higher gains if the stock price rises. Understanding these differences helps employees make informed decisions about their equity compensation.