Gaming CEOs traded salary for stocks. Their ‘gamble’ is set to pay off

Should you have RSUs in your executive compensation package?
  • Deferral of taxation that would come from immediate payment of the bonus, and deferral of taxation on the unvested portion until vesting has later occurred.
  • Leverage of the amount of bonus magnified by the growth potential of the RSU, still further enhanced by the current low value due to the pandemic
  • Assurance of a future payout to the CEO by use of RSUs rather than options 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.
  • Use of the extra RSUs / redemption strategy to minimize effective taxation as RSUs vest, where in this way the company would typically pay for or assist in payment of the taxation, and the executive is more willing to pay a portion of the taxes since vesting has occurred.
  • The benefit to company morale from the “vote of confidence in the company’s future” by the CEO choosing company stock over cash.
  • The potential cascading benefit to the company with current employees and future hires who are heartened by the example of the man or woman at the top choosing company equity over an immediate cash payout.
  • Benefit to investors, alliance partners and other stakeholders by enhanced “alignment” of the CEO’s financial prospects tied to company growth.
  • 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

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A corporate, tax and employment attorney since 1977, Rob represents CEOs and senior executives on employment, compensation, equity and separation matters.

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Robert A. Adelson

Robert A. Adelson

A corporate, tax and employment attorney since 1977, Rob represents CEOs and senior executives on employment, compensation, equity and separation matters.

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