Restricted stock, also known as restricted securities, is stock of a company that is not fully transferable (from the stock-issuing company to the person receiving the stock award) until certain conditions (restrictions) have been met. Upon satisfaction of those conditions, the stock is no longer restricted, and becomes transferable to the person holding the award. Restricted stock is often used as a form of employee compensation, in which case it typically becomes transferable ("vests") upon the satisfaction of certain conditions, such as continued employment for a period of time or the achievement of particular product-development milestones, earnings per share goals or other financial targets. Restricted stock is a popular alternative to stock options, particularly for executives, due to favorable accounting rules and income tax treatment.[1][2]
Restricted stock units (RSUs) have more recently[when?] become popular among venture companies as a hybrid of stock options and restricted stock. RSUs involve a promise by the employer to grant restricted stock at a specified point in the future, with the general intention of delaying the recognition of income to the employee while maintaining the advantageous accounting treatment of restricted stock.[1]
in venture capital–backed startups may include the following:[3]
A period of time before vesting, intended to prevent employees from "walking away" from the venture. There is generally a one-year "cliff" representing the formative stage of the company when the founders' work is most needed, followed by a more gradual vesting over a four-year schedule representing a more incremental growth stage. Founders are sometimes permitted to recognize a portion of the time spent at the company before investment in their vesting schedule, generally from six months to two years.
"Double trigger" acceleration provision, stating that the restricted stock vests if the company is acquired by a third party and the employment of the grantee is terminated within a certain time frame. This protects employees from losing the unvested portion of their equity share award in case the employees are forced out by new management after a change in control. Another alternative is "single trigger" acceleration under which the change of control itself accelerates the vesting of the stock, but this structure is more risky for investors because following an acquisition of the company, key employees will not have any equity award that provides a financial incentive to remain with the company.
"Market standoff provision", stating that holders of restricted stock may not sell for a certain period of time (usually 180 days) after an initial public offering. This is intended to stabilize the stock price of the company after the IPO by preventing a large sale of stock on the market by the founders.
^ abWilson, Fred (8 November 2010). "Employee Equity: Restricted Stock and RSUs". Retrieved 19 August 2013.
^Lecture 18 - Legal and Accounting Basics for Startups, Stanford University. Attorney Carolynn Levy, General Counsel at Y Combinator.
^Springmeyer, Bryan. "Negotiating Restricted Stock Agreements - Preparing for Series A". Retrieved 19 August 2013.
Restrictedstock, also known as restricted securities, is stock of a company that is not fully transferable (from the stock-issuing company to the person...
agent in various professional sports Restricted list, a roster status in Major League Baseball Restrictedstock, stock of a company that is not fully transferable...
with limited exceptions in various countries. Restrictedstock and its close relative restrictedstock units give employees the right to acquire or receive...
company was known as RestrictedStock Partners, Inc. SecondMarket was founded in 2004 by Barry Silbert to provide liquidity for restricted securities in public...
2023, Boeing awarded Calhoun an incentive of about $5.29 million in restrictedstock units to "induce him to stay throughout the company's recovery." In...
purchase a limited amount of stock at a predetermined price. The resulting shares that are granted are typically restrictedstock. There is no obligation for...
Zappos for 10 million shares of Amazon's common stock and provided $40 million in cash and restrictedstock for Zappos employees. Zappos was founded in 1999...
Common stock is a form of corporate equity ownership, a type of security. The terms voting share and ordinary share are also used frequently outside of...
AWS, Jassy earned a base compensation of $175,000 in 2020, plus a restrictedstock unit award of 4,023 shares (a value of $12,104,844.93 as of July 26...
where stock issuance prices must usually be published. The par value of stock remains unchanged in a bonus stock issue but it changes in a stock split...
and stock. On November 1, 2021, Intuit officially completed the acquisition for $5.7bn in cash, $6.3bn in common stock, and 573,000 restrictedstock units...
cash, $12 billion in Facebook shares, and an additional $3 billion in restrictedstock units granted to WhatsApp's founders. 2014 March Security Someone discovers...
marketability, is the only distinction between the restrictedstock and its freely traded counterpart. Restrictedstock can be traded in private transactions and...
compared to stock options with a strike price of $0. restrictedstock units (RSUs) – Rights to own the employer’s stock, unlike restrictedstock they are...
Golden handcuffs come in different forms, such as employee stock options or restrictedstock, which endow only when the employee has been with the company...
accounting officer. Upon being appointed CFO, he was issued 6,337 restrictedstock units (currently worth approximately $4 million). Maestri's official...
144 Stock" is an American term given to shares of stock subject to SEC Rule 144: Selling Restricted and Control Securities. Under Rule 144, restricted and...
Stanley, an additional $3 billion in restrictedstock units granted to WhatsApp's founders Koum and Acton. Employee stock was scheduled to vest over four years...
A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds...
fines. The award was a 74% raise, which included over $18 million in restrictedstock. Dimon received $34.5 million in fiscal year 2022. Dimon donates primarily...
creative officer, receiving an annually base salary of $700,000 and restrictedstock valued $1,500,000. Alba stepped down as chief creative officer in April...
alongside stock options or in lieu of) has increased. Restrictedstock has its detractors, too, as it has value even when the stock price falls. Restricted stock...
year. He also received 90,000 shares of restrictedstock and 510,000 shares of performance restrictedstock. In April 2022, the company signed a partnership...
cash consideration of up to $23 million and about 122,131 shares of restrictedstock. In July, EXL purchased the business process consultancy Blue Slate...
Global Information