The unit will be vested in 3 annual intervals with the first installment vesting in December 2013. She sent me a snippet of some literature she received that reads:
The value of an RSU equals the stock price in the market times the number of shares, so a 500 share RSU award with a share price of $10 makes the value of the award $5000. Retains value even when market price is below $10/share.
Anyone have experience with RSUs? My questions are:Full value shares are considered to be worth more than stock options since the value of an RSU is determined by the price of the stock rather than the appreciation of the stock price since the grant date.
1. Does she receive the entire unit at once, but is restricted from selling each installment until it vests? Or will she not see her shares at all until each vestment date passes?
2. What's the deal with the RSU shares retaining value even if the share price falls? Seems like the value of her shares would fall (or rise) simultaneously with the open market price.
3. It looks like these RSUs came about as an alternative to stock options after some accounting standard changes made options unexpendable. As for taxes, I guess she doesn't owe any until after the vesting period. Then will she only owe taxes on the shares she sells or will she have to pay ordinary income tax based on the value of the RSU?
4. The company currently does not pay a dividend but could in the future. Would she receive dividends on any shares she's awarded before they vest? How would they be taxed?
Thanks for any info and input. I'm going to send her a link to this thread. She's a Boglehead in training (she just doesn't know it yet.)