What Happens to Restricted Stock Units (RSUs) When Google Employees Join Competitors
When Google employees leave the company, the treatment of their restricted stock units (RSUs) can vary based on the specific terms of their RSU agreements and the company's policies. This comprehensive guide will explore the different aspects that employees need to consider when dealing with RSUs upon leaving Google to join a competitor.
Vesting Schedule
RSUs typically vest over a set period, often four years with a one-year cliff period before any vesting takes place. This means that the employee can only expect to receive vested shares after the initial one-year period. If an employee leaves the company before the RSUs are fully vested, they will usually forfeit any unvested shares. Only the vested RSUs at the time of departure can be retained by the employee.
Post-Employment Period
After leaving Google, employees may have a limited time to exercise any vested RSUs, depending on the company's policies. This post-employment period can be crucial as it allows the employee to benefit from the value of the RSUs before selling them or exercising their options. However, the exact period varies and should be reviewed in detail according to the specific terms of the agreement.
Non-Compete and Non-Solicitation Clauses
When an employee leaves Google, they may be subject to non-compete and non-solicitation clauses in their employment contract. These agreements aim to protect the interests of the company from unfair competition. However, such clauses vary by jurisdiction and may not always be enforceable. Legal advice is crucial when dealing with these clauses to ensure compliance and understand any potential restrictions.
Tax Implications
Upon vesting, RSUs become subject to income tax. This tax liability is determined based on the fair market value of the shares at the time of vesting, regardless of whether the employee remains with the company or moves to a competitor. Understanding and planning for these tax implications is essential to manage financial obligations effectively.
Company Policies
Google may have specific policies regarding the handling of RSUs for employees who join competitors. These policies can include additional restrictions or conditions that may affect the employee's ability to benefit from their RSUs. It is essential for employees to review their RSU agreements and consult with HR or a legal advisor to gain a tailored understanding of their rights and obligations.
For example, an employee who left Google in 2020 might have noticed that their shares were unrestricted once they departed. While there were black-out periods during employment to prevent insider trading, those restrictions no longer applied post-employment. Understanding the nuances of RSU agreements is critical in managing one's financial and legal position when transitioning to a new company.
In summary, the treatment of restricted stock units (RSUs) for Google employees who join competitors involves multiple factors, including vesting schedules, post-employment periods, non-compete and non-solicitation clauses, tax implications, and company policies. Careful review and consultation with HR or legal advisors can help ensure that employees fully understand their rights and obligations during this transition.