restricted stock unit
Restricted Stock Unit is a promise from your employer to give you company shares later, once you have stayed and worked long enough to earn them.
In plain English
Here is the strange part. On the day your offer letter proudly announces you have been given shares worth ₦8,000,000, you actually own nothing. Not one unit. What you have is a promise, dressed up to look like a gift.
A Restricted Stock Unit, RSU for short, is a company's pledge to hand you real shares later, provided you stick around for a set period called the vesting schedule. Say a Lagos fintech startup, flush with new funding, offers a senior engineer RSUs worth ₦12,000,000 over four years. That engineer does not touch a single share on day one. Instead, a quarter vests each year, and only if they are still employed on that date. Leave in year two, and the unvested RSUs simply vanish, as if they were never spoken of.
This is why RSUs are sometimes called golden handcuffs. The company is not being generous for generosity's sake. It is buying your loyalty in instalments, betting that the promise of future shares will keep you at your desk through the tough quarters when a rival is trying to poach you.
For a Nigerian professional working at a UK based tech firm, RSUs often show up alongside salary in the offer letter, taxed as income the moment each batch vests, not when the shares were first promised. So if 250 units vest when the share price is £20 each, that £5,000 gets added to that month's pay and taxed accordingly, whether or not you sell a single share.
The diaspora angle matters here too. Someone sending money home from a company that pays partly in RSUs needs to remember that shares are not cash. You cannot wire your mother a fraction of an unvested unit. You need the vesting date to arrive, the shares to land in your account, and often a sale, before that value becomes naira in someone's palm in Enugu.
A Lagos based software company grants a product manager 4,000 RSUs vesting over four years. If the shares are worth ₦2,000 each at vesting, year one alone delivers 1,000 shares worth ₦2,000,000, taxed as income that year, before the manager decides whether to hold or sell.
Questions people ask
Do I pay tax on RSUs before I sell the shares?
Usually yes. Most tax authorities, including in the UK and Nigeria, treat vested RSUs as income at the point they vest, based on the share price that day, regardless of whether you sell immediately or hold on.
What happens to my RSUs if I resign or get let go?
Any units that have not vested yet are typically forfeited immediately. Only the shares that already vested before your last working day belong to you, which is why many people time their exit around a vesting date.
Are RSUs the same as share options?
No. A share option gives you the right to buy shares at a fixed price later, so you only benefit if the price rises above that. An RSU simply gives you the shares outright once vested, with no purchase required.
Last reviewed