how do restricted stock units work for a company that isn’t public
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Imagine you have a favorite toy store called “Toyland” that you really love. Now, Toyland is not a public toy store, which means you can’t buy shares of the company on the stock market like you can with big companies like Disney or Apple.
But even though Toyland isn’t a public company, they still want to reward their hardworking employees. So, instead of giving them regular money or shares of the company, they give them something called “restricted stock units” or RSUs.
Here’s how it works: When an employee does a great job or reaches a certain milestone, Toyland decides to give them RSUs as a special reward. Each RSU is like a promise or a special coupon that says, “Hey, in the future, when Toyland becomes a public company or gets sold, you will get something special!”
Think of the RSUs as magical tokens that the employees keep safe until something big happens to Toyland. When that special moment comes, and Toyland becomes a public company or gets sold, those RSUs can turn into real shares or money for the employees. It’s like the magical tokens transforming into real toys or treats!
Now, it’s important to remember that RSUs can have rules and restrictions. For example, the employees might have to wait for a certain amount of time, like a few years, before they can get the actual shares or money. This helps Toyland make sure the employees stay committed to the company and continue doing their best.
So, in simple terms, restricted stock units are like special tokens given to employees by companies that aren’t public. These tokens can turn into real shares or money in the future when something big happens to the company. It’s a way for the company to say, “Great job, and we appreciate your hard work!”
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