The Ultimate, Expert Guide to Stock Options and RSUs Explained
ResumizeAI
Wondering what your offer really means when it includes equity? You’re not alone. Many candidates accept stock options or RSUs without understanding vesting, taxes, or how to compare offers. This guide explains stock options and RSUs clearly, with step-by-step examples, tax scenarios, and negotiation tactics you can use today. Learn when options beat RSUs, how to calculate potential upside, and what red flags to watch for—so you can make confident career and compensation decisions.
What are Stock Options? A Clear, Actionable Definition
What are RSUs? How Restricted Stock Units Deliver Value
Vesting Schedules, Acceleration, and Departure Scenarios
Taxes and Timing: How to Minimize Your Tax Bill
How to Value Equity Offers: Practical Calculations and Comparisons
Negotiation Strategies and Red Flags to Watch
Key Takeaways
- 1Stock options give the right to buy shares later; RSUs are shares delivered at vesting — know which you’re receiving before you accept an offer.
- 2Always confirm vesting schedule, cliffs, and post-termination exercise windows; negotiate extended windows or acceleration where possible.
- 3Model after-tax value: RSUs taxed at vesting; NSOs taxed at exercise; ISOs may get favorable capital gains if holding rules are met.
- 4Value equity offers by calculating realistic future prices, applying probability discounts, and converting to annualized cash equivalents for negotiation.
- 5Watch for red flags: unclear paperwork, forced repurchase rights, or short exercise windows after termination.
- 6Negotiate using data: comparable salaries, signing bonuses, extra equity, or protective clauses; use targeted language in emails and resumes to build leverage.
- 7Use tools like Resumize.ai to polish negotiation emails, update resumes to reflect leverage, and craft tailored messaging when asking for better equity or cash terms.
Conclusion
Frequently Asked Questions
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