When it comes to compensation packages, one popular option for employers is the use of restricted stock units (RSUs). Amazon, one of the largest and most successful companies in the world, is known for using RSUs as part of its employee compensation structure. In this article, we will explore what an RSU agreement is and how it works at Amazon.
What is an RSU Agreement?
First, let`s define what an RSU agreement is. An RSU is a type of equity compensation typically offered to employees by a company. Essentially, an RSU is a promise by the company to give the employee a certain number of shares of company stock at a later date. The RSUs typically vest over a period of time, meaning the employee does not receive the shares all at once, but rather over a schedule established in advance. Once the shares vest, the employee owns them outright.
An RSU agreement is the document that outlines the terms of the RSU grant. It will typically include information such as the number of shares granted, the vesting schedule, and the date the shares will be issued to the employee. It may also include any restrictions or performance criteria that must be met in order for the shares to vest.
RSUs at Amazon
Amazon is known for offering RSUs as part of its employee compensation package. According to reports, Amazon employees receive RSUs as a significant portion of their compensation, often making up a large percentage of their total pay. One reason for this is that RSUs are a way for companies to align the interests of employees with those of the company – since the shares are tied to the company`s stock price, employees are motivated to work hard and contribute to the company`s success.
At Amazon, RSUs typically vest over a period of four years, with 5% vesting after the first year, 15% after the second year, 40% after the third year, and 40% after the fourth year. The number of shares granted can vary depending on the employee`s job level and performance, but reports suggest that it can be a significant amount – for example, some senior executives may receive RSUs worth millions of dollars.
RSUs are a popular way for companies to compensate employees, and Amazon is no exception. By offering RSUs as part of its compensation package, Amazon is able to incentivize employees to work hard and contribute to the company`s success. For employees, RSUs can be a valuable way to build wealth and participate in the growth of the company. If you are considering a job at Amazon or another company that offers RSUs, it is important to carefully read and understand the terms of the RSU agreement.