Restricted Stock Unit (RSU)

A restricted stock unit (RSU) is a right awarded to an employee by an employer which entitles the employee to receive a predetermined number of shares in their employer’s stock at a predetermined future date.

The period between the date on which RSUs are issued (typically, at the start of employment) and the date on which the employee can obtain the promised shares is known as the vesting period. Loss of employment during the vesting period normally results in the loss of RSUs. This means employees must remain employed by the RSU’s issuer until the end of the vesting period in order to benefit from the RSU.

RSUs may have additional terms and conditions attached which lay out the conditions under which the RSU can be exercised. For example, an RSU agreement may required an employee to reach certain targets before the RSU becomes exercisable.

In Switzerland, RSU are classified as entitlements to employee shares throughout their vesting periods, and only become taxable at the end of the vesting period.

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