Performance Stock Units (PSUs): Same Grant, $0 or $569,000 — Two Different Tax Problems

A PSU grant worth $250,000 at target can pay out at zero shares — or at $569,000 of ordinary income with a $75K–$85K withholding gap nobody flagged in advance.

Performance Stock Units are no longer a CEO-only instrument. Pushed by shareholder advisory firms like ISS and Glass Lewis, public companies have moved 40–50% of senior executive equity packages from straight RSUs into PSUs over the last few years — and the trend is working its way down the org chart.

If you just received your first PSU grant or you're looking at an offer letter that includes them, the planning problem is fundamentally different from anything you've dealt with before.

In this video, Aaron Klemm walks through what makes PSUs genuinely different from RSUs — the multiplier that turns a known share count into an unknown — and the three-outcome worked example (zero payout, target payout, 175% payout) that shows why you can't plan for a PSU grant by assuming it'll settle at target. Plus the three-step framework for managing the close-out window before the multiplier is announced.

Chapters:
0:00 — The $250K PSU grant that can settle at $0 or $569K
0:39 — Executive comp series overview
1:11 — What a PSU actually is: time + performance vesting
2:00 — Why PSUs are becoming standard at public companies
2:35 — How PSUs differ from RSUs: the multiplier unknown
3:18 — Worked example: zero, target, and 175% payout outcomes
4:31 — The $75K–$85K withholding gap at a 175% multiplier
6:19 — The three-step framework: plan document, modeling, close-out window
7:17 — Watch the close-out window — and what to do before it opens

This is video four in the executive compensation series. Previous videos covered RSUs, NSOs, and ISOs. Up next: Employee Stock Purchase Plans (ESPPs).
This is for educational and informational purposes only and is not research or a recommendation regarding any security or investment strategy. Neither IFP Advisors LLC, IFP Securities LLC, dba Independent Financial Partners (IFP), nor their affiliates offer tax or legal advice. Consult with a qualified tax or legal professional for advice specific to your situation.
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Securities offered through IFP Securities, LLC, dba Independent Financial Partners (IFP), member
FINRA/SIPC. Investment advice offered through IFP Advisors, LLC, dba Independent Financial Partners (IFP), a Registered Investment Advisor. IFP and Inflection Point Wealth Management are not affiliated. This material is for educational purposes only and not personalized advice.

Видео Performance Stock Units (PSUs): Same Grant, $0 or $569,000 — Two Different Tax Problems канала Aaron Klemm, CFP®