Difference Between ESOP and RSU: Equity Compensation

When it comes to employee stock benefits, understanding the difference between ESOP and RSU is crucial for both employers and employees. ESOP (Employee Stock Ownership Plan) and RSU (Restricted Stock Units) are two distinct types of equity compensation that companies offer to their workforce. An ESOP is a retirement benefit plan where employees receive company stock, often as part of a profit-sharing initiative. It helps align employees’ interests with the company's growth and provides long-term financial security. On the other hand, RSUs are a form of compensation where employees are granted restricted stock units that vest over time, usually tied to performance or tenure.