Restricted Stock Unit (RSU) Agreement Template

Create a legally-sound RSU agreement that clearly defines vesting schedules, stock award terms, and employee rights. Used by HR professionals and legal teams to implement equity compensation programs.

Restricted Stock Unit Agreement Template

A Restricted Stock Unit (RSU) Agreement is a legal document that outlines the terms and conditions of stock-based compensation awarded to employees. This comprehensive template ensures clear documentation of equity grants, vesting schedules, and associated rights and obligations.

What This Template Is For

This RSU agreement template serves as a formal contract between an organization and its employees receiving equity compensation. It defines the specific terms of the stock award, including the number of units granted, vesting schedule, and conditions for forfeiture. The agreement protects both the company's interests and employee rights by clearly documenting all aspects of the RSU grant.

When To Use This Template

Use this template when:

  • Implementing a new equity compensation program
  • Granting RSUs to new employees
  • Issuing additional stock awards to existing employees
  • Documenting annual equity grants
  • Updating existing RSU agreements to reflect new terms

How To Customize It

Follow these steps to customize the RSU agreement:

  1. Insert company and recipient information in the designated fields
  2. Specify the number of RSUs being granted and the award date
  3. Define the vesting schedule (typically 4 years with 25% annual vesting)
  4. Add any company-specific terms or conditions
  5. Include references to relevant equity plans or policies
  6. Review and adjust termination and forfeiture provisions
  7. Have legal counsel review the customized agreement

Common Use Cases

This template is commonly used for:

  • Executive compensation packages
  • Employee retention programs
  • New hire equity grants
  • Performance-based stock awards
  • Annual equity compensation plans

Best Practices

Follow these guidelines for effective RSU agreements:

  • Use clear, unambiguous language
  • Include all required legal provisions
  • Clearly define vesting conditions
  • Specify handling of dividends and voting rights
  • Address tax implications
  • Include confidentiality and compliance requirements

Template Variations

Consider these variations based on your needs:

  • Performance-based vesting schedules
  • International employee provisions
  • Double-trigger acceleration terms
  • Special executive terms

Success Stories

Companies successfully using this template have reported:

  • Improved employee retention through clear equity terms
  • Reduced legal review time and costs
  • Better compliance with securities regulations
  • Increased employee understanding of their equity compensation

Frequently Asked Questions

What is the standard vesting schedule for RSUs?

The most common vesting schedule is four years with 25% vesting annually, though companies may customize this based on their needs.

How are taxes handled for RSUs?

RSUs are typically taxed as ordinary income when they vest, based on the fair market value of the shares at vesting.

What happens to unvested RSUs if an employee leaves?

Usually, unvested RSUs are forfeited upon termination, unless specified otherwise in the agreement or triggered by certain events like death or disability.

Can RSUs be transferred to others?

Generally, RSUs cannot be transferred, assigned, or pledged to others before vesting, except in specific circumstances defined in the agreement.

Do RSU holders have voting rights?

No, RSU holders typically do not have voting rights until the units vest and are converted to actual shares.