A Restricted Stock Unit Agreement
is an agreement made between a company and a recipient or purchaser of
that companies restricted stock, usually an employee. A Restricted
Stock Unit is a grant valued in terms of company stock, but in such a
situation, company stock is not issued at the time of the grant.
Common in corporate settings, Restricted Stock Unit Agreements
must identify the parties and the number of restricted shares being
awarded. The agreement should refer to specific provisions of the employment agreement
in terms of addressing the issue of the termination of the employee’s
employment with the company. Generally, if the employee is terminated
without cause, then he gets to keep the shares and they lose their
restricted status. If the company terminates the employee for good
cause, then the employee usually loses the shares altogether.
Usually entered into by an employer and an employee, a Restricted Stock Unit Agreement
is a critical part of enticing the employee to stay with the company
and, by tying the employee’s financial interests to those of the
company, motivates the employee to perform at his her best.
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