A Stock Unit Award Agreement is a contract between an employer and an employee that outlines the conditions under which the employee will receive company stock units. This type of agreement is common for incentive programs that are designed to reward employees for their performance. There are two types of Stock Unit Award Agreements: Non-Qualified Stock Unit Awards and Incentive Stock Unit Awards. Non-Qualified Stock Unit Awards are taxable upon grant and vesting, whereas Incentive Stock Unit Awards are not taxable until the employee sells the stock. Both types of agreements typically include provisions for vesting, taxation, and forfeiture. The agreement also outlines the administrative procedures for granting and tracking stock units, as well as the employee's responsibilities with respect to the units.
Stock Unit Award Agreement
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FAQ
RSUs are currently the most common type of equity award. They are a promise from the employer to grant company shares to their employees at a future date (or series of dates). RSUs typically vest over a period of time. Some awards may be contingent on meeting specific performance marks (Performance Shares noted below).
Restricted stock awards (RSAs) and restricted stock units (RSUs) are two alternatives to stock options (such as ISOs and NSOs) that companies can use to compensate their employees. While stock options offer employees the ?option? to buy shares at a fixed price, RSAs and RSUs are grants of stock.
The Stock Award is an unfunded and unsecured promise by the Company to deliver shares in the future. Capitalized terms used and not otherwise defined herein are used with the same meanings as in the Plan.
Each RSU will correspond to a certain number and value of employer stock. For example, suppose your RSU agreement states that one RSU corresponds to one share of company stock, which currently trades for $20 per share. If you're offered 100 RSUs, then your units are worth 100 shares of stock with a value of $2,000.
RSUs are taxed as income to you when they vest. If you sell your shares immediately, there is no capital gain tax, and you only pay ordinary income taxes. If instead, the shares are held beyond the vesting date, any gain (or loss) is taxed as a capital gain (or loss).
A good RSU offer is one that should incentivize you to put your best foot forward. One of the primary purposes of offering employees company equity is to encourage them to feel as though they have a stake in the company.
A stock option award is a type of compensation contract that companies use to incentivize employees. This contract is an agreement between the company and employee that gives them the right, but not the obligation, to purchase shares of company stock at a set price in the future (usually for pennies on the dollar).
Stock awards provide corporations a way to pay their executives based on company performance so their compensation aligns with the expectations of the shareholders. Companies may also grant stock awards to lower-level employees to incentivize them to take ownership of the company's performance and retain their loyalty.