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    Equity Comp & Exits
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    US · United States

    RSU

    Also called: Restricted Stock Unit, Restricted Stock Units

    TL;DR

    Restricted Stock Units, equity compensation that vests into shares without requiring exercise, common at late-stage and public companies.

    RSUs are a promise to deliver shares (or cash equivalent) once vesting is met. Unlike options, there's no exercise price and no exercise decision. When RSUs vest, the employee receives shares that are immediately taxed as ordinary income at fair market value.

    RSUs are typical at late-stage private companies and public companies because they have value even when the share price is flat, there's no 'underwater option' problem. Some private companies use 'double-trigger RSUs' that vest only on both service AND a liquidity event (acquisition or IPO).

    Worked example

    A late-stage employee receives 8,000 RSUs vesting over 4 years (2,000/yr). At each vest, FMV $40 × 2,000 = $80k of ordinary income (with payroll tax), the company withholds 22% to 37% in shares automatically.

    Common pitfalls

    • •Granting RSUs in early-stage private companies where 83(b) on restricted stock is more favorable.
    • •Failing to plan for the tax bill at vesting.
    • •Confusing single-trigger and double-trigger RSU vesting.

    When this shows up in a pitch deck

    Late-stage equity-comp content; not deck content.

    Related terms

    ISO

    A US tax-advantaged stock option for W-2 employees, eligible for long-term capital-gains treatment if holding-period requirements are met.

    NSO

    Non-Qualified Stock Options, a more flexible US option type than ISOs, available to contractors and advisors but without the same tax-advantaged treatment.

    Strike Price

    The fixed price at which an option holder can purchase a share, set at fair market value on the grant date and locked in for the option's life.

    83(b) Election

    A US tax election letting restricted-stock recipients pay tax on the grant-date value (not at vesting), often saving early-stage founders meaningful tax.

    Lockup Period

    The post-IPO window, typically 90 to 180 days, during which insiders are contractually prohibited from selling their shares on the public market.

    Use RSU in your next pitch deck

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