Overview
What is it
An RSU is a company's promise to deliver a fixed number of shares, or their cash equivalent, to you on a future date, contingent on your continued employment through that date. Unlike a Stock Option, an RSU carries value the moment it's granted, since you don't have to pay anything to receive the shares once they vest. You simply have to still be employed there.
Why does it matter
Long-term incentive programs, including RSUs, PSUs, and stock options, typically represent the largest component of a senior executive's total compensation at public companies, and RSUs are among the most widely used instruments within that mix. Understanding the difference between the promise of unvested RSUs and the reality of vested shares shapes how you read your own net worth and how you think about departure timing.
What do people most often get wrong
People often treat an RSU grant as already-owned stock. Until each vesting date arrives, you don't hold shares; you hold a contractual right to receive them if you're still employed on that date. That distinction is what makes RSUs a retention tool, and it's why leaving before a vest date means forfeiting the unvested portion outright, not partially.