Distinguish between stock option and Restricted share unit (RSU).

Banking & FinanceManagementCompanies/Organisations

The major differences between stock option and Restricted share unit (RSU) are as follows −

Stock Option

  • It is right to employee to buy fixed share at a fixed price and time.

  • The employees receive stock after vesting period.

  • Stock is used as a mode of payment.

  • Taxes on non- qualified stock and incentive stock.

  • Market price (stock) is greater than grant price.

  • The shareholders have full rights.

  • There are voting rights and dividends.

  • There is no exercise price.

Restricted Share Unit (RSU)

  • It is an assurance by a company to pay the amount of stock/cash after questing period is completed.

  • The employees can get tax benefits after vesting period.

  • The mode is payment is either stock or cash.

  • Taxes on regular income.

  • Value gains in RSU.

  • Shareholders have limited rights.

  • An exercise price will be based on market price.

raja
Published on 27-Jul-2020 11:34:12
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