Understanding Your RSUs: A Guide for Employees

If your company has included RSUs in your compensation package, congratulations! It means your employer believes in both your contributions and the company's future potential. But how do RSUs actually work, and what does it mean for you? Let's break it down:

RSUs: The Basics

• Ownership: Unlike cash bonuses or regular stock options, RSUs give you a direct stake in the company. You're essentially being awarded shares of company stock.

• Vesting: The catch is that you don't immediately get to sell those shares. They 'vest' over time, typically based on your continued employment. Think of it as earning your ownership gradually.

• Taxes: This is important! When your RSUs vest, their value at that time counts as taxable income. You'll need to be prepared to pay taxes, even if you don't sell the shares immediately.
  

Key Points to Understand

• Your Grant Document: This outlines the specifics of your RSU award:

• Number of shares granted

• Vesting schedule (how many shares unlock each year or period).

• What happens if you leave the company (do you lose unvested shares?)

• The Power of Appreciation: If the company does well and the stock price grows, your RSUs gain value. That's the potential upside!

• Taxes are Unavoidable: When RSUs vest, it triggers a tax event. Plan for this. Consider setting aside money or speaking to a tax advisor.

• Company's Financial Health: Do your research! The value of your RSUs depends on the company's performance. Keep updated on its financial results and overall prospects.
  

Questions to Ask Yourself

• Is this a long-term play? RSUs generally reward staying with the company for several years.

• Do I believe in the company's future? If you're not confident in the business, RSUs may carry more risk than reward.

• Am I prepared for the tax implications? Understand how much you might owe in taxes when your RSUs vest.
  

RSUs as a Long-Term Investment

Think of RSUs as a way to align your financial success with the company's. If you're committed for the long haul and bullish on the company's potential, RSUs can be a valuable part of building your wealth.

Need More Help?

• Talk to HR: They can clarify the specifics of your company's RSU plan.

• Spring City Partners: Can help you strategize on how RSUs fit into your overall financial plan and how to manage the tax implications.