Looking to create loyalty and tenure with your employees? What about giving employees the benefit of owning company shares? In this video, we dive into what you should know about restricted stock units and the benefits they offer your business.
What is a Restricted Stock Unit or RSU?
RSU’s are equity compensation issued by an employer to an employee in the form of company shares. This form of compensation offers employees a certain number of company shares that are subject to a vesting schedule and other potential benchmarks.
What is the benefit of RSU’s?
From an employer’s perspective, using this form of compensation helps to attract and retain key employees. From an employee perspective, RSUs are a unique and potentially-lucrative style of compensation, especially if the share price increases. When someone’s compensation is tied to company performance, it naturally creates motivation.
There are 2 types of RSU’s
- Single Trigger RSU: Time-Based Vesting
Employees are given stock that only has value after a certain time period. In other words, they have to stick around to benefit.
- Double Trigger RSU: Performance-Based Goals
Employees must meet both time-based and performance-based goals, increasing the likelihood that stock is going to your company’s best-performing, most loyal employees.
RSUs vs Stock Options
Some may wonder about the difference between RSUs and stock options. Stock options are when a company gives an employee the ability to purchase stock at a predetermined price. RSUs are grants of stock that a company gives to an employee without any purchase.
Retaining employees and nurturing their growth is pivotal to continued growth.
If you’re a business owner and would like to speak about this further, please reach out and click here to schedule a call with one of our advisors.