PSU (Performance Stock Unit) Vesting Calculator
Performance Stock Units (PSUs) vest based on performance metrics like Total Shareholder Return (TSR), revenue growth, or EBITDA. Award size at vest is target shares × performance multiplier (typically 0-200%). For senior execs, PSUs often comprise 50-70% of equity comp. Tax is owed at vest on full value — same as RSU, but vesting amount is uncertain until measurement date.
PSU vs RSU
RSU vests on time alone — fixed quantity. PSU vests based on performance — variable quantity (0-200% of target typical). Tax treatment is identical at vest: full FMV is ordinary income, W-2 wages. Difference matters for retention (PSU penalizes underperformance) and forecasting (PSU uncertain until measurement date).
Common Performance Metrics
TSR (Total Shareholder Return) relative to peer group: 80% of S&P 500 large-cap PSUs use this. Revenue growth: common for growth-stage SaaS. Adjusted EBITDA / EBITDA margin: mature mid-cap companies. Operational targets (customer count, NPS): emerging hyper-growth companies. Most plans use 3-year measurement window with cliff vesting at end.
Tax Trap at Above-Target Vest
If performance multiplier hits 200%, vesting amount doubles. Tax doubles too — at marginal rates. Common surprise: target $1M PSU vests at 200% = $2M ordinary income, pushing income from 32% to 37% bracket. Combined with state 10% + Medicare = ~50% tax on the extra million. Always model upside scenario tax impact before measurement period closes.
Source: IRS Publication 525, Mercer 2025 Executive Compensation Survey, Equilar 2025 Long-Term Incentive Trends. Last updated: May 2026.