Say a company gives you 1 RSU worth 100$. How much does it actually cost them? I guess a lot less than if you received 100$ cash but how much? What's the theory behind shares?
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- Google əๅɓoo⅁RSUs are new shares and don’t cost the company anything as they don’t have to actually buy them.
When/if your RSU vests, shareholders lose $100 (or whatever the market price is on that day) as their shares are diluted.
- Amazon / Eng sgJf21moreAlthough they don't cost the company anything in cash they do have to be expensed at fair market value. So, they also reduce profitability.
- Oracle pzdWhy do you think it's a lot less? Of course there's a vesting schedule so you need to take time value of money into account, but other than that I can't think of anything. RSUs are a way to tie your incentive to company performance. They are not a cost saving mechanism.
- Google OoHG83OPYou misread my question. I'm not asking if it is worth less to me but to the company. If they give me 100$ , it comes from a bank account. The company has to earn that money and they could buy a sandwich with it. If they give me a RSU, it's like printed money. They don't have to "directly" have earned it.
Say a company makes 0 profit but is highly valued.