The Advantage of RSUs in Your CEO Compensation Package

One week ago, on February 28, 2017, CEOWorld magazine published an article I wrote on  “The Advantage of RSUs in Your CEO Compensation Package.” 

For CEOs, C-Suite executives and other senior level executives, equity compensation is a key part and often the most important part of their compensation package. For many senior executives, equity means stock options or restricted stock. But in many circumstances the better choice is RSUs, restricted stock units.

CEO compensation package - restricted stock unitsRSUs are most useful in mature companies where the CEO or C-suite executive takes a position where stock has considerable value, but growth is still expected in the public company or perhaps an IPO or liquidity event is not far off. In that circumstance, the key advantages of RSUs is that taxation would be put off until vesting has occurred and the company would typically pay for or assist in payment of the taxation that would arise, and is willing to do so because vesting has already occurred.

RSUs are even more valuable to the CEO or senior executive when he or she takes over in a turnaround situation in a mature company where there is no assurance of appreciation and the CEO needs assurance of a floor in his or her equity value.  RSUs also offer a clear advantage over stock options to CEOs and C-Suite executives because RSUs after vesting always retain some value.  RSUs effectively have a floor on value. They can never go underwater and become worthless as often happens with stock options.

My article discusses these subjects –

  • What are RSUs?  When are RSUs paid out?
  • How are RSUs taxed?   How do you pay the taxes that come due on RSUs?
  • When are RSUs most useful?  When are RSUs least useful?
  • What sort of RSU package should a CEO or C-suite executive look for?
  • Key Terms to negotiate in RSU grants

My article on this subject was published February 28, 2017 by CEOWorld magazine.

To see my full article, go to LINK:   http://ceoworld.biz/2017/02/28/advantage-rsus-ceo-compensation-package/  or my website http://www.executiveemploymentattorney.com/articles-section/the-advantage-of-rsus-in-your-ceo-compensation-package/

With more than 12.4+ million page views, CEOWORLD magazine is the world’s leading business magazine written strictly for CEOs, CFOs, CIOs, senior management executives, business leaders, and high net worth individuals worldwide.

The terms of the RSUs may be set out in the employment agreement or a separate grant agreement.  Either way, the CEO or C-suite executive needs to be aware of a number of important terms to be reviewed and negotiated in RSU agreements.  With RSUs, as with restricted stock and options, bonus, severance and other key areas of the executive’s employment agreement, it is important to retain trained tax and executive employment counsel.

If you or one of your colleagues is a CEO or senior executive negotiating a compensation package and has questions on RSUs or terms to include in that package, I am glad to assist.  please do reach out to me at 617-875-8665 or email radelson@engelschultz.com.

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Author: radelson

Robert Adelson has been a corporate and tax attorney since 1977. He began as an associate at nationally prominent New York City “mega” law firms, first at the Wall Street firm Dewey Ballantine Bushby Palmer & Wood and later at the Park Avenue firm Weil Gotshal & Manges. In 1985, Adelson returned home, where he has since established himself as a respected Boston business attorney. He has attained partner at several small and midsize Boston law firms, most recently at Lawson & Weitzen LLP and then Zimble Brettler LLP, where he was a partner from 1994 to 2004 before becoming a partner at Engel & Schultz LLP.