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How Restricted Stock Works. Restricted shares provide an employee with a stake in their company, but they have no tangible value before they vest. Vesting gives employees rights to employer-provided assets over time, giving the employees an incentive to perform well and remain with a company.
Restricted Stock. transfers share of stock to employees, subject to an agreement that the shares cannot be sold, transferred, or pledged until vesting occurs.
Restricted shares are unregistered, non-transferable shares issued to a company's employees. They give employees incentives to help companies attain success. They are most common in established companies that want to motivate people with an equity stake. Their sale is usually restricted by a vesting schedule.
Restricted Stock Units cannot be sold or transferred while they are subject to forfeiture. This means that the employee cannot sell or transfer the units until they are vested.
Restricted stocks are unregistered shares the holder cannot transfer until certain conditions are met. In contrast, unrestricted stocks are not subject to such restrictions for ownership transferability.
Here's an example. Say you've been granted 1,500 RSUs and the vesting schedule is 20% after one year of service, and then equal quarterly installments thereafter for the next three years. This would mean that after staying with your company for a year, 300 shares would vest and become yours.
Once the Restricted Stock Units vest, the employee receives shares of the company stock in a brokerage account. If the company is publicly traded, selling the shares can be as simple as placing a trade order. Note that blackout periods may apply.