Restricted Stock Units
Restricted Stock Units (RSUs) are a form of equity compensation where employees receive units that convert to company stock after a vesting period. RSUs are reported on Form 4 when granted (Code A) and when they vest.
The Trader's Take
The Signal
RSU grants (Code A) are neutral compensation awards, but the decision to hold or sell vested RSUs can be informative. Insiders who hold vested RSUs demonstrate confidence, while immediate sales may indicate diversification needs.
The Noise
Routine RSU grants as part of compensation packages are expected and don't typically indicate strong sentiment.
Actionable Insights
- 1RSU grants (Code A) are compensation, not investment decisions—they're neutral signals.
- 2Monitor what insiders do with vested RSUs—holding is more positive than immediate selling.
- 3Large RSU grants can signal company confidence in executive retention.
- 4RSU vesting schedules create predictable patterns in insider ownership.
Regulatory Context & Context
Common Misconceptions
RSUs are not the same as restricted stock—RSUs don't grant ownership until vesting.
RSU grants don't require investment decisions—they're compensation awards.
Vested RSUs convert to shares, which then become subject to normal trading restrictions.
Frequently Asked Questions
What are Restricted Stock Units (RSUs)?
RSUs are a form of equity compensation where employees receive units that convert to company stock after a vesting period, providing deferred compensation.
Are RSU grants bullish signals?
RSU grants are generally neutral—they're compensation awards, not investment decisions. However, insiders holding vested RSUs rather than selling immediately can be a positive signal.