A compensatory award granted by a company to an employee or other individual performing services for the company. A RSU represents a promise by the company to transfer a share of the company's stock or a cash payment equal to the value of a share of the company's stock at a specific time in the future.

The holder of a RSU is not the beneficial owner of the shares underlying the RSU award and therefore is not entitled to voting, dividend, or other stockholder rights unless and until shares are delivered in settlement of the award.

Some companies offer dividend equivalent rights to holders of RSUs to give them an amount equal to the dividends they would have received if they owned the shares. RSUs can become subject to Section 409A of the Internal Revenue Code if they are not settled shortly after vesting.

For further information on RSUs generally, see Practice Note, Overview of the Taxation of Equity Compensation Awards: Restricted Stock Units. For further information on the application of Section 409A to RSUs, see Practice Note, Section 409A: Deferred Compensation Tax Rules: Overview: Restricted Stock Units and Equity Pitfalls Under Section 409A Checklist: Issues with Restricted Stock Units. For a model restricted stock unit agreement that can be used in conjunction with an equity plan for granting restricted stock units to employees, see Standard Documents, Restricted Stock Unit Agreement (Stock-Settled) (Employees) and Restricted Stock Unit Agreement (Cash-Settled) (Employees).