Every year, Procter & Gamble employees receive a Long-Term Incentive Plan (LTIP) award and face the same decision:
Should I choose stock options or Restricted Stock Units (RSUs)?
It's an important question—but we don't think it's the first question you should ask.
After working with P&G employees over the years, we've found that the better decisions come from looking at the bigger picture.
Question #1: What role do I want this award to play?
Before comparing stock options and RSUs, ask yourself:
What is this award supposed to accomplish?
- Is it meant to maximize long-term wealth?
- Provide greater certainty?
- Complement the rest of your compensation?
Your answer often provides more clarity than comparing payout scenarios.
Question #2: How much of my financial future is already tied to P&G?
This is the conversation we find ourselves having most often.
Think about everything connected to P&G:
- Your salary
- Annual bonus
- Profit Sharing Trust (PST)
- Savings Plan
- Existing LTIP awards
- Other P&G stock you've accumulated over your career
The LTIP election isn't an isolated decision.
It's another piece of an already meaningful relationship between your financial future and one company.
Question #3: What do I expect my life to look like when this award actually matters?
The election happens today, but the award becomes valuable years from now.
Ask yourself:
- Will I still be working at P&G when it vests?
- Will retirement be approaching?
- Will I want additional exposure to P&G stock?
- Will I need liquidity?
Thinking ahead often changes how you view today's decision.
Question #4: What's my plan after the award vests?
This is where we think many employees spend too little time.
The election is only the beginning.
Before choosing either award, think about:
- Will I continue holding the shares?
- At what point would I diversify?
- How will taxes affect my decision?
- How does this fit with my overall investment strategy?
Sometimes those decisions have a greater impact on your long-term outcome than the election itself.
A Simple Decision Framework
Rather than asking,
"Which election is better?",
ask yourself:
If my primary objective is...
...maximizing long-term upside,
stock options deserve serious consideration. They provide greater leverage to future stock appreciation, but that additional upside comes with additional risk.
...capturing value with greater certainty, RSUs may be the better fit. They retain value regardless of whether P&G's stock experiences significant appreciation after the grant date.
...building long-term financial security, don't make the decision in isolation. Evaluate how this year's election fits alongside your existing P&G stock, retirement benefits, tax situation, and overall investment portfolio.
Ultimately, this isn't just an equity compensation decision, it's a financial planning decision.
The biggest mistake isn't choosing stock options instead of RSUs—or vice versa. The biggest mistake is making the election without considering how it fits into the rest of your financial life.
