Why RSUs Complicate Candidate Decisions and Counter-Offers

A restricted stock unit is a promise by a company to deliver shares to an employee after a specified vesting period - usually one to four years - contingent on continued employment. The value of the promise fluctuates with the share price, which means the financial reality of an RSU grant on day one is different from its value when it vests. For candidates considering a move, unvested RSUs create a genuine financial anchor: leaving means forfeiting shares that may represent a significant portion of total compensation. Getting a candidate to walk away from £60,000 of unvested equity requires an offer that addresses the gap.

For staffing agencies placing candidates at technology companies, private equity-backed firms, or any business that includes equity in its compensation package, understanding RSUs is not optional. A recruiter who cannot explain how RSUs vest, how they are taxed, and how to model their real value relative to a competing offer will lose candidates at the offer stage to counter-offers that exploit the equity anchor. More damaging, they will lose candidates to their own confusion - candidates who talk themselves out of a good offer because they cannot calculate the actual trade-off.

RSU grants are also increasingly present below C-suite level, particularly in technology and scale-up companies. A mid-level software engineer at a public tech company may have £80,000 to £120,000 in unvested RSUs. That is a number that changes how every competing offer needs to be structured.

How Restricted Stock Units Work

An RSU grant specifies a number of units (each representing the future right to one share), a vesting schedule, and the conditions that must be met for vesting to occur. The most common vesting schedule is time-based: a four-year grant with a one-year cliff means no shares vest in year one, 25% vest at the one-year anniversary, and the remaining 75% vest monthly or quarterly over the following three years. Performance-based vesting ties delivery of shares to hitting specific financial or operational metrics.

At vesting, the RSUs convert to actual shares. The market value of those shares on the vesting date is treated as ordinary income and taxed accordingly - in the UK, through PAYE via the employer; in the US, as supplemental wage income subject to federal income tax withholding. The employee then holds shares that they can sell (subject to any lock-up restrictions at the company) or retain. Any subsequent gain from the date of vesting to the date of sale is subject to capital gains tax rather than income tax.

For a candidate with £40,000 in unvested RSUs across three remaining vesting events, a straight comparison of base salaries misrepresents the true compensation trade-off. A recruiter at a specialist technology staffing firm working with this candidate would calculate the expected value of the unvested equity, model the tax treatment at each vesting event, and present the analysis to both the candidate and the prospective employer so that any offer can be structured to address the gap - either through a sign-on bonus, an accelerated equity grant at the new employer, or a base salary premium.

RSU vs Stock Options

RSUs deliver shares at vesting regardless of share price - their value is the market price at vesting date. Stock options give the holder the right to buy shares at a predetermined price (the strike price). If the market price is above the strike price, the option is "in the money" and has value. If the market price is below the strike price, the option is worthless. RSUs always retain some value as long as the company has value; stock options can expire worthless. RSUs are simpler for candidates to understand and value; options require modelling the probability that the share price will exceed the strike price by a meaningful amount.

Restricted Stock Unit in Practice

A senior technology recruiter was working with a principal software engineer at a late-stage private company who had £95,000 in unvested RSUs, vesting over the next 18 months before a potential IPO. The target client, a public tech company, offered the candidate a 15% base salary increase with a new RSU grant of £60,000 vesting over four years. The recruiter modelled the scenario: the forfeited RSUs were worth more than the first two years of the new grant combined, and the IPO upside on the private company equity added further uncertainty. He presented the analysis to both parties. The client responded with a £40,000 sign-on bonus to offset the near-term vesting gap. The candidate moved. The placement confirmed within three weeks of the revised offer.