How Are the Number of Shares in an RSU Grant Determined for a Publicly Traded Company?

RSU grants specify a number of shares you will vest into over time (e.g. 100,000 shares over 4 years). That said, most companies target a dollar amount when issuing a new RSU grants (e.g. $400,000 vesting over 4 years). To bridge the two, what happens is (1) The company targets a dollar amount for the grant; and (2) they use the "current market price" to determine how many RSU shares that will be, and then (3) they issue the RSU grant with the requisite calculated shares.

What can surprise people however is how the "price" is determined. Rather than being the closing price of a specific date, most companies use the average of the last 20-40 trading days. Their logic being that the trailing average is likely a better representation of a "fair" price vs one given day (especially if its a day where the price changed significantly).

This can work in individuals favor or detriment however in certain circumstances. If the stock price has increased significantly in the last couple of weeks (e.g. 5,6,7,8,9,10,11,12,13,14 as the last 10 days), a trailing average (9.5 in the example above) will give you a stock price materially below the market price (14 in the example above) --> resulting in a larger RSU grant vs. the current market price

And if the opposite has occurred (14,13,12,11,10,9,8,7,6,5 as the last 10 days), a trailing average (9.5 in the example above) will give you a stock price materially above the market price (5 in the example above) --> resulting in a smaller RSU grant vs. the current market price