RSU vs Stock Options: Which Is Better for Your Job Offer?

At a public tech company, a $50,000 RSU grant and a $50,000 stock option grant are not worth the same thing — often by a wide margin. Which comes out ahead depends on the company's stage, the strike price, your tax situation, and how long you plan to stay. Getting this wrong means either undervaluing an offer or accepting one that looks richer than it is.

This guide cuts through the terminology and gives you a practical framework for comparing the two, whether you're evaluating an offer from a pre-IPO startup or a listed company.

What RSUs and stock options actually are

Restricted Stock Units (RSUs) are a promise to deliver shares after you meet a vesting condition — usually time-based (e.g. four years with a one-year cliff). Once vested, you receive actual shares. At a public company, those shares are immediately sellable. At a private company, they're illiquid until a liquidity event.

Stock options — most commonly Incentive Stock Options (ISOs) in the US or EMI options in the UK — give you the right to buy shares at a fixed price (the strike price or exercise price) set at the time of grant. If the share price rises above that strike, the difference is your gain. If it doesn't, the options expire worthless.

The fundamental difference: RSUs have floor value the moment they vest (assuming the company is worth anything), while stock options have speculative value that depends entirely on future price appreciation above the strike.

For a deeper look at how to assess either type in the context of a full package, see What is total compensation?.

RSU vs stock options: where each one wins

RSUs win when:

• The company is already public or late-stage with a clear path to liquidity
• The share price has already appreciated significantly (options granted earlier have higher strike prices baked in)
• You have a shorter time horizon or lower risk tolerance
• You want predictability — RSUs don't expire and don't require capital outlay

Stock options win when:

• The company is early-stage and shares are priced low (a $0.10 strike on shares that reach $10 is a 100x gain; RSUs granted at the same early stage would have delivered the same upside, but options typically come in larger quantities)
• You're in a jurisdiction with favourable option tax treatment on exercise or sale
• You're willing to exercise early (e.g. an 83(b) election in the US) and hold to qualify for long-term capital gains rates
• The company hasn't yet seen significant valuation inflation — meaning the strike price is genuinely low relative to realistic exit scenarios

In practice, large public tech companies — Google, Meta, Amazon — grant RSUs almost exclusively. Startups and growth-stage companies lean on options because RSUs trigger a tax bill at vest even before liquidity exists.

The tax treatment is where the real difference sits

This is where most candidates get tripped up.

RSU taxation (UK): RSUs are taxed as employment income at vest. If you receive £20,000 worth of shares on a vesting date, that £20,000 is subject to Income Tax and National Insurance at your marginal rate — up to 45% for additional-rate taxpayers, plus 2% NI. Any subsequent gain from holding the shares is then subject to Capital Gains Tax when sold. According to ONS ASHE 2024 data, median total pay for software developers in London sits around £72,000–£75,000, which puts most tech workers in the 40% Income Tax band — meaning roughly 42% of each RSU vest goes to HMRC before you've touched the shares.

RSU taxation (US): RSUs are taxed as ordinary income at vest, at federal rates up to 37%, plus state taxes (up to 13.3% in California). Your employer typically withholds shares to cover the tax bill — usually at a flat 22% federal supplemental rate, which can be less than your actual marginal rate if you're a high earner, leaving a tax shortfall.

Stock option taxation (US — ISOs): ISOs can qualify for long-term capital gains treatment (0%, 15%, or 20% federally) if you hold shares for at least two years from grant and one year from exercise. The catch: the spread at exercise is an AMT preference item, which can trigger Alternative Minimum Tax.

Stock option taxation (UK — EMI options): Enterprise Management Incentive options are one of the most tax-efficient equity structures available. The gain from exercise to sale is taxed at Capital Gains Tax rates (currently 18% or 24% depending on your total gains), not Income Tax, provided HMRC approval conditions are met. For a senior hire on £90,000 base, the difference between EMI and unapproved options can be worth tens of thousands of pounds over a four-year vest.

For a full breakdown of how to assess options specifically, the guide to evaluating stock options walks through dilution, preference stacks, and exercise windows.

How to assign a realistic value to each

Neither RSUs nor options should be taken at face value on an offer letter.

For RSUs at public companies: Take the current share price, multiply by the number of units, and apply your marginal tax rate to each vest tranche. That's your net value assuming the price doesn't move. A $200,000 RSU grant vesting over four years at $50,000/year, taxed at 40%, nets roughly $30,000/year after federal and state tax. That's meaningful — but not $200,000.

For RSUs at private companies: Apply a steep liquidity discount. Most startup equity never reaches a liquidity event. Even if it does, secondary market data (where available) or recent funding round valuations give you a reference — but preference stack, anti-dilution provisions, and subsequent down rounds can erode common shareholder value significantly.

For stock options: Calculate the current spread (current 409A valuation minus strike price). If the spread is zero or negative — which happens when options are granted at current fair market value — the options have no intrinsic value today. All value is speculative. Model a realistic exit: if the company raises at a 3x multiple, what do your options return after dilution, preferences, and tax? A $100,000 notional grant with a strike at fair market value in a company that achieves a modest exit may return far less than a $60,000 RSU grant at a stable public company.

Always check whether the total comp number on an offer is being inflated by an optimistic equity valuation. The full guide to evaluating a job offer covers how to stress-test the full package.

Frequently asked questions

Are RSUs better than stock options for startup employees?

Not necessarily. At an early-stage startup, RSUs vest into shares that may have no liquidity for years and can trigger an immediate Income Tax or ordinary income bill on illiquid stock. Options — especially ISOs in the US or EMI options in the UK — can defer or reduce the tax burden and still deliver significant upside if the company grows. RSUs make more sense as a company approaches or achieves a public listing, when shares can actually be sold.

What happens to unvested RSUs or options if I leave a company?

Unvested RSUs are almost always forfeited when you resign or are terminated. Vested RSUs you already own remain yours. For options, you typically have a post-termination exercise window — historically 90 days for ISOs, though some companies have extended this to several years. If you don't exercise within that window, the options expire worthless. Check the specific terms in your option agreement before accepting or resigning.

How do I compare two offers where one has RSUs and one has options?

Reduce both to an expected after-tax annual value. For RSUs at a public company, that's relatively straightforward (shares × price × (1 − marginal rate) ÷ vest years). For options, model the spread at a realistic exit multiple, net of dilution and tax, then probability-weight it. If the option-heavy offer requires the company to 5x just to match the RSU offer's after-tax value, that's a meaningful hurdle. Use CompVerdict to benchmark the base salary component so you're comparing apples to apples on the cash side.

Can I negotiate equity type as well as the amount?

At large public companies, the equity type is generally fixed — they grant RSUs. At private companies and growth-stage startups, there's more flexibility. You can sometimes negotiate the grant size, vesting schedule, cliff length, or accelerated vesting on acquisition. EMI eligibility in the UK is worth raising explicitly if the company is eligible — the tax saving is significant enough that a company granting unapproved options may be willing to restructure. See the negotiating total comp page for approaches that work.

The RSU vs stock options question doesn't have a universal answer — it depends on company stage, tax jurisdiction, your time horizon, and how the equity is priced relative to realistic outcomes. What does have a clear answer is whether the base salary component of your offer is competitive. Run your full offer through CompVerdict — enter your role, location, and experience level, and get an instant benchmark against official government salary data from ONS, BLS, Destatis, and other national statistical sources. It takes under 30 seconds and requires no sign-up.