this might seem like a dumb question. how does one calculate the RSU/ yr when calculating TC? is it value against ‘RSU’ in box 14 on one’s w2? or is the total amount vested so far divided by the number of years of work?
If you just want to calculate your TC, then sure RSU * per unit price/ number of years the RSU will vest. Typically the number of years to fully vest all units is 4 yrs. If you want to do tax calculations then it is a bit complicated. When your RSUs are vested, the stock broker will sell some units to withhold taxes and give you the rest
Let us say you were awarded 400 RSUs and they vest over four years. At end of first year 100 will vest. If stock price on that day is $14, you just added $1400 to your comp for that year; and that will show up on your W2 as “ordinary income” and is taxed at ordinary income tax rates. Now company will decide that on this compensation you need to pay $420 as tax. So on the same day they sell 30 stocks to pay $420 to government. You are left with 70. A few months later say stock price is $15 and you sell these 70 stocks. Now you have had a capital gain of $70; which will be taxed as capital gain; rate being dependent on how long you held these 70 stocks after date of vesting. You made total of 1470; 1400 through compensation from company; and 70 through your smart investment (by holding stocks for few months), not thanks to company. If your actual tax on that compensation income of $1400 needs to be more or less than $420, the difference will get adjusted against other taxable income when you file your tax return. Makes sense?
Value of RSUs / total years of vesting