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