RSUs and Remote Work: Navigating the New Normal‍

Casey Fenton

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December 7, 2023

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You've got a business to run and a team to manage. The challenge? Your team is scattered across various time zones and continents. Enter the “new normal” scheme of business—where remote work rules supreme. As you grapple with the complexities of managing a remote team, you might be pondering over compensation strategies that go beyond the traditional salary package. 

This is where Restricted Stock Units (RSUs) come into the picture. In this article, you’ll discover how you can use RSUs as a motivational tool and part of the compensation package for your remote employees.

Is Remote Work The New Normal?

Let's face it: remote work is not just a trend—it's a paradigm shift. The COVID-19 pandemic accelerated what was already a growing movement, pushing companies of all sizes to reevaluate their office-centric philosophies. Studies suggest that many employees prefer remote work and are even willing to take a pay cut for the flexibility it offers.

So, yes, remote work is becoming the new normal. But how do you keep your remote team motivated? How do you make them feel they're part of something bigger? That brings us to our next point: RSUs.

RSUs and Remote Work: The Common Denominator

In a world where remote work is increasingly becoming the norm, ensuring that your team is both motivated and aligned with your company's long-term objectives is critical. Restricted Stock Units, commonly known as RSUs, can serve as a common denominator that helps you achieve both goals. But why are RSUs such a potent tool for remote work setups? 

RSUs are commitments to give an employee a set number of shares (or the cash equivalent) of your company’s stock after a predetermined vesting period. Unlike stock options, RSUs have no strike price that needs to be paid to convert them into shares. This makes them more straightforward and less risky for employees, particularly those who might not be savvy in stock market investments.

Why RSUs for Remote Work?

1. Long-Term Commitment

When you offer RSUs that vest over a period of time, you're not just offering a financial benefit; you're creating a pact. This pact says, "We’re committed to your growth, as long as you’re committed to ours." RSUs serve as a long-term bond that keeps employees invested in the company's success. This is particularly useful for remote workers who might not feel the everyday camaraderie of a physical office but can still feel tied to the company's long-term objectives.

2. Global Applicability

In a remote work setup, your team could be spread across the globe, operating under different financial regulations and tax implications. One of the challenges of such diversity is standardizing a compensation package that makes sense across varied jurisdictions. RSUs have the advantage of being relatively easy to administer internationally. With the right legal advice, you can often tailor RSU plans to be compliant with local laws, making it a universally applicable incentive.

3. Reduced Upfront Cost

For startups and SMEs operating on limited budgets, cash flow is king. While you want to offer attractive compensation to lure top talent, you may be constrained by immediate financial commitments. RSUs allow you to promise value over time without a large upfront expenditure. This can make your job offers more competitive, even when you’re up against larger companies with deeper pockets.

4. Alignment with Company Success

RSUs can be tied to performance milestones, either for the individual, the team, or the company as a whole. For remote teams, this alignment is particularly beneficial. It means that every team member, no matter where they are in the world, has a vested interest (quite literally) in the company achieving its objectives.

A Win-Win Scenario

From the employee's perspective, RSUs provide a form of compensation that has the potential to grow significantly over time. If the company does well, so do they. From the employer's perspective, RSUs can act as golden handcuffs, encouraging longevity and sustained performance.

How to Implement RSUs on Remote Work Setups

Integrating RSUs into your remote work setup is more than just a decision—it's a process. From the legal framework to communication strategies, there are several layers to sift through. Below, we explore the essential steps for implementing RSUs in a remote work environment.

Legal Framework and Jurisdictional Concerns

Before you even think about issuing RSUs, you need to consult with legal experts familiar with both the U.S. legal system and those of any other countries where your employees reside. This is crucial because tax implications and securities laws can vary dramatically from one jurisdiction to another.

Steps to Take:

  1. Consult Internal or External Legal Teams: Get advice on your overall equity strategy, as well as any specific challenges related to remote work and international jurisdictions.

  1. Review Existing Employment Contracts: Ensure that the inclusion of RSUs doesn’t conflict with any pre-existing agreements.

  1. Craft RSU Agreements: Document the terms, conditions, and limitations of the RSUs clearly, considering local legal requirements.

Vesting Schedule and Milestones

One of the essential elements of an RSU program is the vesting schedule, which outlines when the RSUs will turn into unrestricted shares that the employee fully owns. A common approach is to include a 1-year cliff, followed by monthly or quarterly vesting.

Steps to Take:

  1. Define Performance Milestones: If the RSUs are tied to performance, clearly define what these milestones are.

  1. Create a Transparent Vesting Schedule: Make sure the schedule aligns with the company’s long-term goals and adequately rewards employee loyalty and performance.

  1. Incorporate Flexibility: Consider whether the vesting schedule should be uniform for all employees or tailored to individual roles and responsibilities.

Communication and Transparency

The success of your RSU program will largely depend on how well it’s communicated to your team. Remember, RSUs are not just a financial instrument; they’re also a tool for motivation and retention.

Steps to Take:

  1. Educate Employees: Use webinars, FAQs, and one-on-one discussions to explain what RSUs are, how they work, and what the vesting schedule looks like.

  1. Ongoing Updates: Regularly update your team on company performance and how it impacts the value of their RSUs.

  1. Provide Resources: Offer calculators or visualization tools that help employees understand the current and potential future value of their RSUs.

Implementation and Ongoing Management

Finally, once you’ve laid down the legal groundwork, determined your vesting schedules, and effectively communicated the what, why, and how of RSUs to your team, you need to manage the ongoing administration of the RSU program.

Steps to Take:

  1. Select a Management Platform: Choose a robust equity management platform to handle the complexities of RSU tracking, especially if you're dealing with a remote and international team.

  1. Document Thoroughly: Keep meticulous records of RSU grants, vesting events, and employee acknowledgments.

  1. Regular Reviews: Periodically review the RSU program to ensure it continues to align with your company’s goals and retains its motivational value for employees.

Potential Challenges and Solutions in Implementing Remote RSU Programs

While RSUs offer a multitude of advantages in remote work environments, implementing them is not without its challenges. Let's dissect the primary obstacles you might encounter and how to navigate them effectively.

Challenge No. 1: Compliance with International Laws and Regulations

Offering RSUs to remote employees residing in different countries brings about complex compliance issues. Local tax laws, employment rules, and securities regulations can all come into play.

Partner with legal and financial advisors in each country where you have employees to ensure that you understand and comply with local laws. Also, use an equity management platform that provides compliance features, enabling you to monitor compliance issues across different jurisdictions from a single dashboard, just like in Upstock. And it’s not just any other dashboard; it’s also motivational!

Challenge No. 2: Equity Dilution

Issuing RSUs increases the total number of shares in circulation, which can dilute ownership for existing stakeholders, including founders and early investors.

Continuously update and review your cap table to keep track of ownership percentages.

Similarly, limit the number of RSUs or implement a "pool" system, whereby only a predetermined number of RSUs are available for distribution.

Challenge No. 3: Cultural Barriers and Varied Perceptions of Ownership

In some cultures, the concept of owning a piece of the company isn't as deeply ingrained as it is in places like Silicon Valley. This can lead to RSUs being undervalued or misunderstood.

Incorporate training modules that are sensitive to different cultural perceptions of ownership and investment. Use targeted communications that resonate with your diverse workforce, explaining the value of RSUs in terms they can relate to.

Challenge No. 4: Managing Employee Expectations

Employees may have unrealistic expectations about the potential value of their RSUs, especially if they are unfamiliar with how startup valuation and ownership work.

Be as transparent as possible about the company's financial health and outlook. Provide resources or workshops to help employees understand how RSUs work and what they can reasonably expect in terms of financial gains.

Challenge No. 5: Ensuring Equal Access and Understanding

Remote employees might feel disconnected from the company, making it harder for them to fully grasp the value or specifics of their RSU package.

Conduct frequent one-on-ones or team meetings to discuss RSUs and answer questions.

Additionally, create a centralized, easily accessible repository of resources where remote employees can learn more about their RSUs.

Being aware of these challenges and proactively seeking solutions helps you implement an RSU program that not only attracts top talent but also keeps your remote team motivated and aligned with the company's long-term goals. It requires some legwork and continuous oversight, but the dividends it can pay in employee satisfaction and retention are well worth the effort.

RSU Best Practices Under The New Normal Remote Work

1. Be Transparent and Educate Your Team

In the era of remote work, transparency isn't just a virtue; it's a necessity. The days when all company communication could happen around a water cooler are long gone. With your team dispersed around the world, possibly across time zones and countries, you have an obligation to ensure everyone understands what RSUs are and what they mean to them. 

Hosting virtual workshops, circulating FAQs, and opening up channels specifically for RSU-related queries are effective ways to ensure that everyone is on the same page. The more your employees understand about equity, the more they can align their personal goals with your company's objectives.

2. Structure a Flexible and Inclusive Vesting Schedule

Flexibility is one of the pillars of remote work, and your RSU program should reflect that. A one-size-fits-all approach won't suffice in a remote work environment. Some team members might be juggling family responsibilities, others might be working flexible hours, and yet others might be freelancers tied to project-specific outcomes. 

Tailor the vesting schedule of RSUs to suit these different needs. Make it performance-based for project-oriented roles, and time-based for roles that contribute to long-term company building.

3. Periodically Review and Update Your RSU Program

Static plans quickly become obsolete. The world is changing, and so should your RSU program. Make it a point to periodically review the terms, conditions, and performance metrics tied to your RSUs. Engage in dialogue with your employees to understand what's working and what isn't. 

This not only shows that you value their input but also gives you valuable insights that can help you fine-tune the RSU program for better alignment with company objectives.

4. Leverage Technology for Effective Management

Managing RSUs can be a logistical challenge, particularly when dealing with a remote workforce. In-house spreadsheets might work for a small, centralized team, but they can be a nightmare for larger, distributed teams. 

This is where equity management software can be a game-changer. Such platforms not only handle the nitty-gritty of RSU administration but often come with built-in compliance checks and educational resources. They can also provide dashboards where employees can track their vesting schedules and the value of their RSUs in real time, adding another layer of transparency and engagement.

5. Think Globally, Act Locally

When your team is spread across different countries or even continents, it's crucial to be mindful of local regulations and cultural norms. This involves working with legal experts who understand the intricacies of local compliance but also means adapting your RSU program to align with cultural expectations about ownership and investment. 

Your RSU program can serve as a bridge between diverse teams, creating a shared sense of ownership, but this can only happen if you adapt it to meet the unique needs and expectations of different cultural contexts.

Empowering Remote Teams in the New Normal

In an era where remote work is rapidly becoming the norm, innovating your compensation packages with Restricted Stock Units (RSUs) can be a game-changing strategy for your company. Beyond just a financial incentive, RSUs act as a powerful tool for fostering a culture of shared ownership and aligned goals among your remote team. 

By adhering to best practices, navigating legal complexities, and committing to transparency and flexibility, you can turn the challenges of remote work into opportunities for collective growth. In doing so, you'll not only solidify your company's standing in today's competitive landscape but also build a motivated, loyal workforce prepared to propel your vision into the future.

Want to see RSUs in action? Book a demo with Upstock today and discover why remote-first companies swear by the platform’s RSU management efficiency and flexibility. 

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ABOUT THE AUTHOR

Casey Fenton

Founder, Upstock & Couchsurfing, AI and Equity Innovator

Casey Fenton, the founder of Upstock & Couchsurfing and an AI and equity innovator, has revolutionized how we perceive and implement equity in the workplace. His foresight in creating platforms that not only connect people but also align their interests towards communal and corporate prosperity has established him as a pivotal figure in technology and community building. Casey speaks worldwide on topics including ownership mindset, worker equity, With Upstock and Couchsurfing, he has demonstrated an unparalleled expertise in harnessing technology for the betterment of community interaction and organizational benefits.

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