A Restricted Stock Unit (RSU) is a form of equity compensation that companies issue to employees. It is a promise from the employer to give the employee shares of the companys stock (or the cash equivalent) on a future date, as soon as the employee meets certain conditions. RSUs are a hybrid of stock options and restricted stock, and they involve a promise by the employer to grant restricted stock at a specified point in the future. RSUs are appealing because they provide an incentive for employees to stay with a company for the long term and help it perform well so that their shares increase in value.

Here are some key features of RSUs:

• RSUs are restricted during a vesting period that may last several years, during which time they cannot be sold.
• Once they are vested, RSUs can be sold or kept like any other shares of company stock.
• Unlike stock options or warrants, RSUs always have some value based on the underlying shares.
• For tax purposes, the entire value of vested RSUs must be included as ordinary income in the year of vesting.
• RSUs can have other restrictions beyond a vesting schedule that are often related to performance.

RSUs are used by companies as an incentive to attract and retain talent. They are more commonly issued by larger, later-stage companies.