Restricted Stock (redirected from Restricted Stock Unit)

Restricted Stock

Insider holdings that are under some other kind of sales restriction. Restricted stock must be traded in compliance with special SEC regulations.

Notes:

Insiders are given restricted stock after merger and acquisition activity, underwriting activity, and affiliate ownership in order to prevent premature selling that might adversely affect the company. Restricted stock cannot be sold without registration with the SEC (under the Securities Act of 1933)or some other special exemption.

See also: Authorized Shares, Float, IPO, Outstanding Shares, Private Placement, Stock

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Restricted stock

Stock that must be traded in compliance with special SEC regulations concerning its purchase and resale. These restrictions generally result from affiliate ownership, M&A activity, and underwriting activity. Many firms are now using restricted stock as a reward for employees. The advantages to restricted stock are: employees get dividends, employees usually get voting rights, and employee gets something even if the stock price drops over the vesting period (whereas an option would be worthless).