Setting up a vesting schedule that works for your team doesn’t need to be complicated. Cake helps thousands of global startups grant options (ESOPs) to their teams in a fully-flexible, fully-customizable way that is easy and intuitive to use.
Starting now, you can do the same thing when issuing RSAs, Share Plans or founder vesting.
What are restricted stock awards?
Restricted stock awards or a restricted stock agreement (RSA) are usually shares of common or ordinary stock that are granted to someone, often paid for by cash or through the provision of services. Generally, these shares are also subject to vesting requirements.
Why use RSAs?
RSAs are usually issued in the early stages of a company. They are an easy way to issue shares immediately to founders and early team members, but risk forfeiture if vesting conditions aren't met.
How are they different from stock options?
Stock options (or ESOPs) do not issue shares immediately, they give the right to purchase stock at a predetermined strike price after the vesting conditions have been met. Usually options require no upfront payment, and could offer favorable tax benefits for employees when structured correctly.
Which should I choose?
Well that all depends on your company, stage, size, location, and more. If you aren’t sure it’s best you consult with your attorney. We usually see our customers choose RSAs if they are setting up founder vesting or want to issue shares immediately at an up-front cost. Compared to customers who choose Stock Options because they want to incentivise their advisors and teams with the future right to purchase stock, without upfront costs.
This article is designed and intended to provide general information in summary form on general topics. The material may not apply to all jurisdictions. The contents do not constitute legal, financial or tax advice. The contents is not intended to be a substitute for such advice and should not be relied upon as such. If you would like to chat with a lawyer, please get in touch and we can introduce you to one of our very friendly legal partners.
