RSUs and Stock Options

Restricted Stock Units (RSUs) and stock options are common forms of equity compensation that tech companies offer to product managers (as well as other kinds of employees).

RSUs are a form of equity compensation that grant an employee the right to receive shares of a company's stock after a certain period of time. RSUs typically vest over a set period of time, usually 3-4 years. Once RSUs have vested, the employee receives the shares of the company's stock.

The advantage of RSUs is that they provide an incentive for the employee to stay with the company and help to align the employee's interests with the company's success. If the company's stock price increases, the employee's RSUs become more valuable.

Stock options, on the other hand, give employees the right to purchase a certain number of shares of the company's stock at a specific price, known as the strike price. The employee typically has a set period of time in which to exercise their options, after which the options expire.

The advantage of stock options is that they can provide significant upside potential if the company's stock price increases above the strike price. However, if the stock price does not increase, the options may not be valuable.

Both RSUs and stock options can be a valuable form of compensation for product managers, as they can provide the potential for significant financial gain if the company performs well. However, it's important to remember that equity compensation can be complex, so it's important to understand the details of the RSU or stock option agreement before accepting a job offer that includes these forms of compensation. It's also important to consider the risks associated with equity compensation and to have a diversified investment portfolio.