Lead
A Reddit user has posted a question about the nature of their 10,000 shares that they will receive over the next four years, asking whether they are common shares, options, or restricted stock units (RSUs). The user’s confusion centers on whether they will need to purchase the shares at a strike price to own them and whether they will only profit if the stock price rises above that strike price.
Background
Employee equity compensation can take several forms, including direct common shares, stock options, and restricted stock units (RSUs). Options give employees the right to buy shares at a predetermined price (the strike price), while RSUs are shares that vest over time and are typically granted at no cost to the employee. Common shares can be granted directly to employees, often as part of a compensation package.
What Happened
The user’s offer letter states “Common Shares,” yet they have heard from colleagues that the compensation may actually be options. The user notes that if the shares are options, they would only earn money if the stock price exceeds the strike price, and they would need to purchase the shares to own them. The user is seeking clarification on the exact nature of the equity award and the conditions under which they would own the shares.
