Some companies grant employees one or the other. My sister is working at a company that lets her choose stock options or RSUs. Every November, all employees must choose their allocation. She’s is granted $25k worth of stock every year. Her company is in the Health Care / Surgical Supply industry. It’s still growing and offers specialty surgery products. She plans on staying at least 10 more years.
Her options are as follows:
- 100% Stock Options
- 25% Stock Options and 75% RSUs
- 50% Stock Options and 50% RSUs
- 75% Stock Options and 25% RSUs
- 100% RSUs
Here’s the rub. The two options are not equal. The company gives stock options at 1-1, but RSUs are 3-1. By this I mean she can choose (1 stock option or .33 RSU). For ease of calculation, her $25k could buy her 1000 stock options or 333 RSUs. So the initial face value of the option is much more, but so to is the risk of not making money on the stock options.
Last night over too many bottles of wine, the two of us went back and forth over which option is best. I figured I’d toss the question out to all of you. What would you do and why?