No strike price, no exercise cost, but ordinary income on settlement.
An RSU is not a right to buy shares. It's a promise to receive shares (or cash equal to the shares) once vesting conditions are satisfied. There is no strike price, no exercise decision, and no upfront cash required. At public companies, this settlement happens automatically on a vest schedule, and the company executes a 'sell-to-cover' transaction, liquidating a portion of the newly vested shares on the open market to pay the tax withholding, depositing the net remaining shares into your brokerage account.
Private companies cannot use sell-to-cover mechanics because no liquid open market exists for their stock. If a private company used standard single-trigger RSUs, employees would incur a massive ordinary income tax bill upon time-based vesting with absolutely no ability to sell shares to pay it. To circumvent this, private companies almost exclusively structure RSUs with 'double-trigger' vesting: shares only settle when both (1) time-based service conditions and (2) a liquidity event (IPO, direct listing, or acquisition), are satisfied. Taxation and share settlement are completely deferred until both triggers are simultaneously satisfied.
Employees holding double-trigger RSUs own zero actual shares while the company remains private. They hold a contractual promise. This creates a critical limitation: an employee with double-trigger RSUs cannot legally execute a direct secondary sale or a standard forward contract, because they possess no transferable asset. This is what necessitates specialized RSU Liquidity Advances for those who need pre-IPO liquidity. It also means that if the company never has a qualifying liquidity event, double-trigger RSU holders may receive nothing despite years of time-based vesting.
No. RSUs require no purchase price or exercise cost. The shares are granted to you upon meeting vesting conditions. However, you will owe ordinary income tax on the full value of shares at settlement. At public companies this is covered automatically via sell-to-cover; at private companies it hits at the IPO or acquisition.
A double-trigger RSU requires two conditions before shares settle: (1) time-based vesting, and (2) a liquidity event like an IPO or acquisition. This is used at private companies to prevent employees from owing taxes on equity they can't yet sell. Both triggers must be satisfied simultaneously.
If the company never has a qualifying liquidity event and your RSUs have a double-trigger, they may never settle, meaning you'd receive nothing despite years of vesting. This is a key risk difference between RSUs and options: options have intrinsic value based on the spread regardless of a formal event, whereas double-trigger RSUs require an exit.
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