How RSUs work
A grant of, say, 400 RSUs vesting quarterly over four years delivers 25 shares each quarter the person remains employed. No exercise, no strike price, no decision to make: shares (or their cash value) simply land as they vest. In most jurisdictions, including the US and Australia, the value is taxed as ordinary employment income at vesting, and any later gain or loss on the shares is a separate capital matter.
RSUs versus options
RSUs are worth something at any share price; options are worth something only above their strike. That makes RSUs lower-risk and lower-leverage: they behave like deferred salary paid in shares, while options behave like a bet on growth. Listed companies with stable share prices favour RSUs; startups favour options because the leverage is the point and the strike can be set low early.
What RSU holders forget
Vesting is a taxable event whether or not the shares are sold, so a strong vest in a rising market creates a tax bill that a later falling market does not refund; many holders sell a portion at vest to cover it. And unvested RSUs are golden handcuffs by design: the standard listed-company retention question is not "are they happy" but "what does their unvested schedule look like over the next four quarters".
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