How Stock Price Changes Can Affect Future RSU Grants

If Restricted Stock Units (RSUs) are part of your compensation, stock price swings can feel personal—especially when they represent a meaningful portion of your long-term wealth. 

It’s natural to worry when your company’s stock declines. After all, RSUs are designed to align your incentives with corporate performance. When the share price drops, it’s easy to assume your future opportunity is shrinking along with it. 

But for RSU holders who receive new grants each year, changes in stock price do not always affect equity compensation in a linear way. Under certain compensation structures and company policies, lower stock prices can change the number of shares awarded in future grants, though outcomes vary widely and are not predictable.

Important context: The examples below are intended solely to explain how RSU share counts are typically calculated at grant. They do not illustrate investment results, expected compensation outcomes, or the performance of any security. Actual RSU grants, future employment, company stock prices, vesting schedules, and tax outcomes are highly variable and depend on employer specific decisions and market conditions.

The Key Concept Most People Miss: Lower Prices = More Shares 

When companies issue RSUs, they typically base the award on a set dollar value, not a set number of shares, based on the fair market value (FMV) of company stock as of the grant date. That one detail completely changes how you should think about stock price volatility. 

Here’s how the math works: 

• If the stock price is high, your target award dollar amount buys fewer shares. 

• If the stock price is low, the same target award dollar amount buys more shares. 

Example: The Same $60,000 Grant at Different Share Prices 

The following simplified illustration is hypothetical and for educational purposes only. It does not reflect actual results, predictions, or guarantees of future outcomes. Market prices, grant practices, vesting, and taxes vary widely.

Say you were awarded an RSU grant in 2023 with a 3-year cliff vesting schedule when the stock price was $387.38.  

2023 Grant Received at FMV of $400: 

• $60,000 ÷ $400/share → 150 shares 

By the time your RSUs vest in 2026, the stock price has dropped $211.60. Your target grant of $60,000 is now worth just $30,000, which definitely hurts. However, because the stock price has dropped substantially, the number of shares received for your 2026 grant with the same target award of $60,000 increases substantially.    

2026 Grant Received at FMV of $200: 

• $60,000 ÷ $200/share → 300 shares  

Why This Matters for Your Long-Term Financial Plan 

Understanding this lower‑price‑equals‑more‑shares mechanism is more than a mathematical curiosity. It should actively shape how you think about: 

• Vesting schedules 

• Diversification decisions 

• Concentration risk 

• Long-term wealth planning 

• Tax efficiency 

Using the example above, assume you sold your 2023 RSUs when they vested at $200 for a pre-tax value of $30,000.  

• 150 shares x $200/share = $30,000 

By the time you sell the vesting shares from your 2026 grant in 2029, the stock price is now higher at $300 (but still only halfway back to the 2023 price of $400).  

• 300 shares x $300/share = $90,000 

Perhaps ironically, the combined pre-tax value of $120,000 from these two grants would actually be equal to your combined target grant amount of $120,000, even though the value of your 2023 grant dropped by 50% and your company's stock price only recovered half of its losses over the following three years.    

If the price did fully recover, your 2026 grant would be sold for an eye-popping $120,000, bringing the combined pre-tax value of your 2023 and 2026 grants to $150,000.  

This is why market volatility—while emotionally taxing—may offer structural advantages in certain RSU programs, though outcomes will vary.

The Hidden Risk: Concentration Can Undermine Your Wealth 

Exposure to any individual stock position, especially stock in the company you’re also relying on for your income, subjects your portfolio to concentration risk. 

If your employer’s stock makes up an outsized portion of your net worth, you’re exposed to a scenario where: 

• Your income 

• Your bonuses 

• Your job stability 

• and your investment portfolio 

...are all tied to a single company’s performance. That’s a lot of eggs in one basket. 

This type of risk can make even small downturns disproportionately painful and can jeopardize your progress toward your financial goals.  

That’s why sophisticated investors (and experienced wealth managers) prioritize disciplined, tax-aware diversification. 

Diversification: Your Best Defense Against the Unexpected 

Selling vested RSUs can help mitigate concentration risk and support long‑term financial stability. It’s not about confidence in your company. It’s about protecting your financial independence. 

Selling doesn’t mean you’re bearish. It means you’re making a strategic financial decision aligned with your long‑term goals. In fact, executives and seasoned professionals often treat RSU vesting as a predictable liquidity event that can be redirected into a more balanced portfolio. 

Even if the price of company stock is lower on the vest date than it was when your RSUs were granted, the additional leverage offered by receiving more RSUs in your new grant means you can continue mitigating risk by selling RSUs at vesting while maintaining plenty of upside tomorrow when your new grants vest. 

Benefits of Diversifying After Vesting 

• You reduce the risk that a single stock determines your financial future 

• You smooth out volatility across your entire portfolio 

• You fund long-term goals with more consistency 

• Future RSU grants may continue to create participation in company equity, depending on company compensation practices

The last point is especially important: diversifying today doesn’t eliminate your participation in tomorrow’s stock recovery. 

Tax Planning Considerations: Where RSU Strategy Gets Sophisticated 

RSUs are taxed as ordinary income at vesting. But your decisions around when to sell can significantly impact: 

• Capital gains exposure 

• AMT considerations (if you also have ISOs) 

• State income taxes 

• Portfolio rebalancing needs 

• Long-term investment planning 

The more your compensation is tied to equity, the more valuable professional tax planning becomes. A tailored strategy can help you: 

• Manage tax brackets 

• Minimize surprise tax bills 

• Thoughtfully time charitable giving 

• Navigate multi-year vesting schedules 

• Plan for future cash flow needs 

This is where a holistic wealth plan makes the difference—integrating tax strategy, equity compensation, and long-term goals for better outcomes 

Putting It All Together: A Smart RSU Strategy Balances Risk and Opportunity 

A disciplined RSU strategy helps you: 

• Reduce risk by selling vested shares 

• May help balance exposure and diversification over time

• Improve tax efficiency by developing a coordinated plan 

• Increase financial independence by reducing reliance on a single company 

This balanced approach allows you to enjoy the benefits of your equity compensation without letting volatility dictate your financial security. 

Key Takeaways 

• Don’t panic when stock prices fall. Lower prices mean future RSU grants may allocate more shares. 

• Diversification is essential. Selling vested RSUs is smart risk management, not a vote of no confidence. 

• Your long-term plan matters. RSUs should be integrated into a holistic financial strategy, including taxes, goals, and risk tolerance. 

• RSUs can provide continued exposure to potential company performance. Even if you diversify today, future grants keep you aligned with company growth. 

Ready to Evaluate Your RSU Strategy? 

At Plancorp, we help high‑earning professionals—especially those with complex equity compensation—build financial plans rooted in clarity, intention, and long-term confidence. 

Whether you’re navigating: 

• RSUs 

• Stock options (ISOs, NSOs) 

• ESPPs 

• Concentration risk 

• Advanced tax planning 

...our team has deep experience helping professionals integrate equity compensation into their broader financial plan.

If you’d like support evaluating your RSU strategy, schedule a 30‑minute call with a Plancorp Wealth Manager and discover how our holistic approach can align your RSU strategy with your life goals.