Restricted 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).

Restricted Security

A stock or right that one acquires through some means other than the open market. One may receive a restricted security through a merger or acquisition, private placement prior to an IPO, or sometimes through a stock option. A restricted security is not registered with the SEC and thus may not be sold publicly until registration has been made. It is less commonly called a letter security.
References in periodicals archive ?
NORDIC BUSINESS REPORT-March 13, 2018-Bavarian Nordic announces awards of restricted stock units to executive management
M2 EQUITYBITES-March 13, 2018-Bavarian Nordic announces awards of restricted stock units to executive management
6, 2017 of inducement restricted stock units for an aggregate of 57,565 ordinary shares to 20 new employees.
The inducement awards consist of an aggregate of 16,000 options to purchase shares of Millennial Media common stock granted to five new hires, 50,000 restricted stock units of Millennial Media common stock specifically negotiated in connection with the hire of another individual, and 350,000 restricted stock units of company stock specifically negotiated in connection with the hire of another individual.
According to TIBCO, with respect to new employees, it granted a total of 69,944 shares of restricted stock to 61 employees under the plan and restricted stock units representing a total of 23,833 shares of common stock to 62 employees under the plan.
In recent years, restricted stock has become a popular form of incentive compensation for executives and other key employees.
In addition to these new corporate governance features, OptionTrax provides what it calls a "user-friendly Web-based equity plan administration package" that enables corporate finance or HR departments to manage options, warrants, restricted stock and restricted stock units.
Another, more significant limit is the fact that most companies are unable or unwilling to transfer stock options or restricted stock to a non-employee-spouse.
But we'll be using a combination of restricted stock and stock options.
The site carries a wide variety of subscription services, including (with annual subscription prices): Shannon Pratt's Business Valuation Update ($229) monthly newsletter; BVLaw ($225), a database of court cases, statutes, IRS materials, and briefs and valuation reports; BVPapers ($225), a database of restricted stock and pre-IPO study papers; Economic Outlook Update ($225), a quarterly report on indicators, consumer prices, inflation and interest rates, unemployment figures and related data; Pratt's Stats ($495), a database of company sale data on private business sale transactions for deals under $100 million; and, Pratt's Stats Public Company ($495), a similar financial information database covering public company transactions.
However, granting restricted stock presents both tax opportunities--and pitfalls--for the company and the employee.
Microsoft's recent decision to replace options with restricted stock overturns a host of market myths and paves the way for new thinking about incentives.

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