Restricted Stock

Restricted stock is a form of equity compensation that is granted to employees of a company under certain conditions. The shares of restricted stock are not immediately tradable, and the employee must meet certain performance criteria before they can be sold.

Restricted stock is often used as a way to attract and retain top talent. It can also be used to align the interests of employees with those of the company.

There are two main types of restricted stock:

• Vested restricted stock: Vested restricted stock is stock that becomes fully owned by the employee once they meet the vesting requirements. The vesting requirements can be based on time, performance, or a combination of both.
• Non-vested restricted stock: Non-vested restricted stock is stock that does not become fully owned by the employee until they meet the vesting requirements. If the employee leaves the company before the vesting requirements are met, they may have to forfeit the non-vested shares.

The vesting requirements for restricted stock can vary depending on the company. However, they typically range from one to four years.

Restricted stock can be a valuable tool for companies to attract and retain top talent. However, it is important to understand the vesting requirements and other terms of the award before accepting restricted stock.

Here are some of the advantages of restricted stock:

• It can be used to attract and retain top talent.
• It can align the interests of employees with those of the company.
• It can be used as a performance incentive.

Here are some of the disadvantages of restricted stock:

• It can be illiquid.
• It can be subject to taxes.
• It can be complex to administer.

Overall, restricted stock can be a valuable tool for companies to use to attract and retain top talent. However, it is important to understand the vesting requirements and other terms of the award before accepting restricted stock.