A restricted stock unit is a form of compensation issued by an employer to an employee in the form of company shares. Restricted stock units, or RSUs, are issued to an employee through a vesting plan and distribution schedule after achieving required performance milestones OR upon remaining with their employer for a particular length of time. RSUs give an employee interest in company stock but they have no tangible value until vesting is complete. The restricted stock units are assigned a fair market value when they vest. Upon vesting, they are considered income, and a portion of the shares is withheld to pay income taxes. The employee receives the remaining shares and can sell them at his or her discretion. Benefits of RSUs including giving an employee an incentive to stay with a company long term and help it perform well so that their shares increase in value. If an employee decides to hold their shares until they receive the full vested allocation, and the company's stock rises, the employee receives the capital gain minus the value of the shares withheld for income taxes and the amount due in capital gains taxes. Limitations of Restricted Stock Units including it not providing dividends, as actual shares are not allocated. However, an employer may pay dividend equivalents that can be moved into an escrow account to help offset withholding taxes, or be reinvested through the purchase of additional shares. --- This episode is sponsored by · Anchor: The easiest way to make a podcast. https://anchor.fm/app