Strategic Impacts of RSUs on Company Performance: Insights into EPS and Profitability Growth
Restricted stock units (RSUs) are a key component of executive compensation schemes, aligning executive incentives with the long-term goals of the company and compensating for the limitations of traditional stock options. This study empirically analyzes the impact of RSUs on corporate performance, p...
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| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
MDPI AG
2025-03-01
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| Series: | International Journal of Financial Studies |
| Subjects: | |
| Online Access: | https://www.mdpi.com/2227-7072/13/1/34 |
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| Summary: | Restricted stock units (RSUs) are a key component of executive compensation schemes, aligning executive incentives with the long-term goals of the company and compensating for the limitations of traditional stock options. This study empirically analyzes the impact of RSUs on corporate performance, particularly earnings per share (EPS) and operating profit. S&P 500 companies’ 27 years of data from 1997 to 2023 were used to evaluate the change in performance before and after the introduction of RSUs, and a paired <i>t</i>-test and hierarchical regression analysis were applied. The research results show that the introduction of RSUs has a stronger performance improvement effect in the 6th to 10th year after the introduction, suggesting that over time, even if RSUs cause short-term cost burdens, they increase the company’s financial stability in the long term and contribute to sustainable growth. In addition, the same analysis was conducted by setting not only EPS but also operating profit as an alternative variable, and it was confirmed that RSUs also have a positive impact on actual profitability improvement. This study emphasizes the need for companies to design RSUs as a strategic compensation system for long-term value creation, not as a short-term performance reward, and suggests the need for a further analysis of the effects of RSUs in various industries and regions. |
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| ISSN: | 2227-7072 |