How to read an RSU grant
An RSU grant is quoted in one of two ways: a dollar value to be delivered in shares, or a fixed number of shares. Either way, the value you actually receive is share count times share price at each vesting date, and that value is treated as ordinary income the moment it vests. This is the single most important thing to internalise about RSUs: they are not a lottery ticket like startup options, they are deferred salary paid in stock. As long as the company's shares are worth more than zero, your grant is worth something, which is why RSUs from a large public company are far more comparable to cash than options from a private one. The calculator turns the grant into that comparable figure so you can stack it against base and bonus on the same scale.
The standard schedule at big technology companies is four years with a one-year cliff, vesting quarterly after the cliff, though front-loaded schedules (more in the early years) and three-year schedules both exist and change the annual value materially. Because the calculator breaks the grant out by year, you can see exactly how much equity income to expect annually, which matters for budgeting and for understanding the true cost of leaving before a tranche lands. Walking away the month before a large vest is, in cash terms, leaving that money on the table.
The tax that surprises people
RSUs are taxed as income at vest, on the full value of the shares that vested, whether or not you sell them. The trap is withholding: employers commonly withhold at a flat supplemental rate that is lower than the marginal rate a well-paid engineer actually pays, which means a chunk of tax is under-collected and lands as a bill the following April. The after-tax column in this tool applies your own estimated marginal rate so the net figure is closer to what you keep than the often-misleading withheld amount. If you hold the shares after vesting and they rise, that further gain is taxed separately as a capital gain when you sell; if you sell immediately at vest, there is usually little or no additional gain to tax. A common, conservative strategy is to sell at vest and treat the proceeds as the cash they effectively are, removing single-stock concentration risk.
RSUs in the context of the whole offer
Valuing the RSU grant in isolation is only step one. To judge an offer you need the equity annualised and added to base and bonus, and then compared to the market for your role, level, and city. That is exactly what the offer evaluator does: it takes the same annualised equity figure this calculator produces, folds in your cash compensation, and places the total on the real market distribution so you know whether the package is below, at, or above market. The two tools are designed to be used together: value the equity here, then carry that number into the evaluator to see whether the whole offer is competitive. And because RSU value is denominated in the company's stock, always weigh the concentration risk of having both your salary and a large share of your net worth tied to a single employer.
Frequently asked questions
- What is an RSU and how is it different from stock options?
- A restricted stock unit is a promise of company shares that convert to real shares on a vesting schedule. Unlike stock options, you do not pay a strike price to receive them, so an RSU always has value as long as the share price is above zero. They are the standard equity grant at large, public technology companies, where the shares are liquid and the value is reasonably predictable. Stock options, by contrast, are common at private startups and only pay off if the share price rises above the strike you must pay to exercise.
- How are RSUs taxed?
- RSUs are taxed as ordinary income at the moment they vest, on the full market value of the shares that vested that day. Your employer usually withholds some shares to cover this, but the withholding rate is often lower than your true marginal rate, which can leave a tax bill at year end. After vesting, any further gain or loss when you eventually sell is a separate capital gain or loss. The calculator applies your estimated marginal rate to the value at vest, which is the tax that bites first and hardest.
- What is a vesting cliff?
- A cliff is a waiting period before any equity vests at all. The most common arrangement at big tech is a one-year cliff on a four-year grant: nothing vests for the first twelve months, then a full quarter of the grant vests at once on your first anniversary, after which the rest vests monthly or quarterly. The cliff is why leaving in your first year usually means walking away with no equity. The calculator notes the cliff so you can see that year one's value depends on staying past the anniversary.
- Why does the calculator assume a flat share price?
- Because nobody can predict the future share price, and pretending to would be dishonest. Holding the price flat gives you a clean baseline: the value of the grant as priced today, vesting on schedule. Real outcomes vary with the stock. If the price rises, your later tranches are worth more than shown; if it falls, less. Treat the flat-price figure as the anchor and stress-test it yourself by entering a higher and a lower price to see the range.
- Is this financial or tax advice?
- No. This is a reference estimate to help you understand the shape and rough value of an RSU grant. It does not account for your exact withholding, state taxes, alternative minimum tax, supplemental wage rates, or the timing of your sales. Equity compensation has real tax complexity; confirm anything that matters with a qualified tax professional before acting.