82:"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.
37:, 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 ("
146:
property becomes transferable, whichever is earlier. In the case of restricted stock, the former date is generally known as the "vesting date" and is the date when the employee recognizes income for tax purposes (assuming that the restricted stock is not transferable at an earlier date, which is how employers generally structure their restricted stock awards). Employees pay
67:) have more recently 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.
179:
attached to it, and therefore the market capitalization of a company with restricted stock outstanding may be overstated. However, restricted stock has less of an impact than stock options in this regard, as the number of shares awarded tends to be lower and the discount for illiquidity tends to be smaller.
78:
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
145:
Under
Section 83 of the Internal Revenue Code, the value of property transferred in connection with the performance of services is included in gross income, and is recognized as such on the date on which the property is no longer subject to a substantial risk of forfeiture, or the date on which the
178:
Restricted stock is generally incorporated into the equity valuation of a company by counting the restricted stock awards as shares that are issued and outstanding. This approach does not reflect the fact that restricted stock has a lower value than unrestricted stock due to the vesting conditions
161:
of the restricted stock at the time of the grant, rather than at the time of vesting. This is often desirable to minimize income tax liability when the restricted stock is granted at a very low value, but is risky in that the tax paid on the stock award is non-refundable even if the stock does not
131:
The median number of stock options (per company) granted by
Fortune 1000 firms declined by 40% between 2003 and 2005, and the median number of restricted stock awards increased by nearly 41% over the same period (“Expensing Rule Drives Stock Awards,” Compliance Week, March 27, 2007). From 2004
118:
were a popular form of employee compensation because it was possible to record the cost of compensation as zero so long as the exercise price was equal to the fair market value of the stock at the time of granting. Under the same accounting standards, awards of restricted stock would result in
110:
issued
Statement no. 123(R), Share-Based Payment, which requires expense treatment for stock options for annual periods beginning in 2005. (Statement no. 123(R) is now incorporated in FASB Accounting Standards Codification Topic 718, Compensation—Stock Compensation.)
127:
switched from stock options to restricted stock in 2003, and by May 2004 about two-thirds of all companies surveyed by HR consultancy Mercer had reported changing their equity compensation programs to reflect the impact of the new option expensing rules.
79:
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.
106:, P.L. 108–357, added Sec. 409A, which accelerates income to employees who participate in certain nonqualified deferred compensation plans (including stock option plans). Later in 2004,
421:
276:
41:") upon the satisfaction of certain conditions, such as continued employment for a period of time or the achievement of particular product-development milestones,
414:
120:
170:
Revenue authorities in the United
Kingdom and the Republic of Ireland have issued guidelines on the taxation of restricted stock and RSU awards.
89:. 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.
407:
85:"Market standoff provision", stating that holders of restricted stock may not sell for a certain period of time (usually 180 days) after an
652:
103:
98:
Executive compensation practices came under increased congressional scrutiny in the United States when abuses at corporations such as
1215:
677:
283:
157:
A grantee of restricted stock may make an "83(b) election" to recognize the income from the restricted stock grant based on the
249:
1205:
671:
1154:
1094:
890:
796:
132:
through 2010, the number of restricted stock holdings of all reporting executives in the S&P 500 increased by 88%.
880:
848:
752:
706:
689:
642:
154:
on any subsequent appreciation or depreciation in the value of the restricted stock in the year in which it is sold.
1200:
665:
659:
202:
1054:
729:
360:"ERSM20192 - Employment-related securities and options: what are securities: Long Term Incentive Plan (LTIP)"
1008:
869:
764:
647:
123:(GAAP) which became effective in 2006 led to restricted stock becoming a more popular form of compensation.
86:
896:
234:
119:
recognizing compensation cost equal to the fair market value of the restricted stock. However, changes to
115:
54:
46:
381:
1210:
1034:
843:
1169:
1089:
854:
838:
801:
683:
626:
594:
1099:
1044:
968:
828:
758:
587:
560:
227:
948:
1139:
1114:
1074:
1059:
978:
917:
875:
619:
529:
519:
42:
312:
337:
1003:
988:
740:
158:
151:
1104:
1024:
820:
701:
577:
452:
430:
1179:
1174:
1109:
1084:
1019:
993:
973:
932:
927:
922:
907:
902:
790:
724:
716:
604:
491:
359:
71:
50:
313:"Employee Stock Options(ESOPs) and Restricted Stock: Valuation Effects and Consequences"
1134:
1129:
1029:
1014:
775:
770:
735:
534:
501:
447:
439:
1194:
998:
983:
958:
912:
864:
567:
524:
511:
462:
17:
1159:
1079:
1049:
1039:
859:
833:
582:
572:
555:
486:
481:
457:
150:
on the value of the restricted stock in the year in which it vests, and then pay
1164:
1144:
1124:
1119:
1064:
953:
885:
45:
goals or other financial targets. Restricted stock is a popular alternative to
1149:
1069:
746:
609:
222:
147:
338:"Restricted stock awards and taxes: What employees and employers should know"
785:
780:
695:
614:
124:
963:
599:
807:
38:
550:
399:
473:
250:"Negotiating Restricted Stock Agreements - Preparing for Series A"
99:
107:
403:
277:"Restricted stock: the tax impact on employers and employees"
223:
Lecture 18 - Legal and
Accounting Basics for Startups
941:
816:
715:
635:
543:
510:
471:
437:
415:
8:
203:"Employee Equity: Restricted Stock and RSUs"
74:–backed startups may include the following:
306:
304:
232:Attorney Carolynn Levy, General Counsel at
422:
408:
400:
121:generally accepted accounting principles
188:
382:"Restricted Stock Units - Income Tax"
196:
194:
192:
7:
270:
268:
266:
336:Petra, Steven T. (February 2012).
104:American Jobs Creation Act of 2004
25:
678:Electronic communication network
282:. Grant Thornton. Archived from
201:Wilson, Fred (8 November 2010).
1:
672:Multilateral trading facility
384:. Irish Revenue Commissioners
1095:Returns-based style analysis
891:Post-modern portfolio theory
797:Security characteristic line
849:Efficient-market hypothesis
753:Capital asset pricing model
690:Straight-through processing
1232:
666:Alternative Trading System
362:. HM Revenue & Customs
57:and income tax treatment.
1216:Employee stock ownership
730:Arbitrage pricing theory
340:. Journal of Accountancy
1009:Initial public offering
870:Modern portfolio theory
765:Dividend discount model
648:List of stock exchanges
87:initial public offering
897:Random walk hypothesis
61:Restricted stock units
1035:Market capitalization
844:Dollar cost averaging
35:restricted securities
18:Restricted securities
1206:Fundamental analysis
855:Fundamental analysis
839:Contrarian investing
802:Security market line
707:Liquidity aggregator
684:Direct market access
595:Quantitative analyst
248:Springmeyer, Bryan.
1100:Reverse stock split
1045:Market manipulation
969:Dual-listed company
829:Algorithmic trading
759:Capital market line
561:Inter-dealer broker
311:Damodaran, Aswath.
228:Stanford University
102:became public. The
53:, due to favorable
49:, particularly for
1140:Stock market index
979:Efficient frontier
918:Technical analysis
876:Momentum investing
698:(private exchange)
588:Proprietary trader
530:Shares outstanding
520:Authorised capital
275:Adkins, G. Edgar.
43:earnings per share
1201:Corporate finance
1188:
1187:
989:Flight-to-quality
741:Buffett indicator
431:Financial markets
162:ultimately vest.
159:fair market value
152:capital gains tax
27:Category of stock
16:(Redirected from
1223:
1105:Share repurchase
817:Trading theories
702:Crossing network
660:Over-the-counter
497:Restricted stock
453:Secondary market
424:
417:
410:
401:
394:
393:
391:
389:
378:
372:
371:
369:
367:
356:
350:
349:
347:
345:
333:
327:
326:
324:
322:
317:
308:
299:
298:
296:
294:
288:
281:
272:
261:
260:
258:
256:
245:
239:
220:
214:
213:
211:
209:
198:
55:accounting rules
33:, also known as
31:Restricted stock
21:
1231:
1230:
1226:
1225:
1224:
1222:
1221:
1220:
1191:
1190:
1189:
1184:
1175:Voting interest
1085:Public offering
1020:Mandatory offer
994:Government bond
974:DuPont analysis
937:
933:Value investing
928:Value averaging
923:Trend following
908:Style investing
903:Sector rotation
818:
812:
791:Net asset value
717:Stock valuation
711:
631:
539:
506:
492:Preferred stock
467:
433:
428:
398:
397:
387:
385:
380:
379:
375:
365:
363:
358:
357:
353:
343:
341:
335:
334:
330:
320:
318:
315:
310:
309:
302:
292:
290:
289:on 30 June 2014
286:
279:
274:
273:
264:
254:
252:
247:
246:
242:
221:
217:
207:
205:
200:
199:
190:
185:
176:
168:
166:Other countries
143:
138:
114:Prior to 2006,
96:
72:venture capital
28:
23:
22:
15:
12:
11:
5:
1229:
1227:
1219:
1218:
1213:
1208:
1203:
1193:
1192:
1186:
1185:
1183:
1182:
1177:
1172:
1167:
1162:
1157:
1152:
1147:
1142:
1137:
1135:Stock exchange
1132:
1130:Stock dilution
1127:
1122:
1117:
1112:
1107:
1102:
1097:
1092:
1087:
1082:
1077:
1072:
1067:
1062:
1057:
1055:Mean reversion
1052:
1047:
1042:
1037:
1032:
1030:Market anomaly
1027:
1022:
1017:
1012:
1006:
1001:
996:
991:
986:
981:
976:
971:
966:
961:
956:
951:
949:Bid–ask spread
945:
943:
939:
938:
936:
935:
930:
925:
920:
915:
910:
905:
900:
894:
888:
883:
878:
873:
867:
862:
857:
852:
846:
841:
836:
831:
825:
823:
814:
813:
811:
810:
805:
799:
794:
788:
783:
778:
776:Earnings yield
773:
771:Dividend yield
768:
762:
756:
750:
744:
738:
733:
727:
721:
719:
713:
712:
710:
709:
704:
699:
693:
687:
681:
675:
669:
663:
662:(off-exchange)
657:
656:
655:
650:
639:
637:
636:Trading venues
633:
632:
630:
629:
624:
623:
622:
612:
607:
602:
597:
592:
591:
590:
585:
575:
570:
565:
564:
563:
558:
547:
545:
541:
540:
538:
537:
535:Treasury stock
532:
527:
522:
516:
514:
508:
507:
505:
504:
502:Tracking stock
499:
494:
489:
484:
478:
476:
469:
468:
466:
465:
460:
455:
450:
448:Primary market
444:
442:
435:
434:
429:
427:
426:
419:
412:
404:
396:
395:
373:
351:
328:
300:
262:
240:
215:
187:
186:
184:
181:
175:
172:
167:
164:
142:
139:
137:
134:
95:
92:
91:
90:
83:
80:
26:
24:
14:
13:
10:
9:
6:
4:
3:
2:
1228:
1217:
1214:
1212:
1209:
1207:
1204:
1202:
1199:
1198:
1196:
1181:
1178:
1176:
1173:
1171:
1168:
1166:
1163:
1161:
1158:
1156:
1153:
1151:
1148:
1146:
1143:
1141:
1138:
1136:
1133:
1131:
1128:
1126:
1123:
1121:
1118:
1116:
1113:
1111:
1110:Short selling
1108:
1106:
1103:
1101:
1098:
1096:
1093:
1091:
1088:
1086:
1083:
1081:
1078:
1076:
1073:
1071:
1068:
1066:
1063:
1061:
1058:
1056:
1053:
1051:
1048:
1046:
1043:
1041:
1038:
1036:
1033:
1031:
1028:
1026:
1023:
1021:
1018:
1016:
1013:
1010:
1007:
1005:
1002:
1000:
999:Greenspan put
997:
995:
992:
990:
987:
985:
984:Financial law
982:
980:
977:
975:
972:
970:
967:
965:
962:
960:
959:Cross listing
957:
955:
952:
950:
947:
946:
944:
942:Related terms
940:
934:
931:
929:
926:
924:
921:
919:
916:
914:
913:Swing trading
911:
909:
906:
904:
901:
898:
895:
892:
889:
887:
884:
882:
881:Mosaic theory
879:
877:
874:
871:
868:
866:
865:Market timing
863:
861:
858:
856:
853:
850:
847:
845:
842:
840:
837:
835:
832:
830:
827:
826:
824:
822:
815:
809:
806:
803:
800:
798:
795:
792:
789:
787:
784:
782:
779:
777:
774:
772:
769:
766:
763:
760:
757:
754:
751:
748:
745:
742:
739:
737:
734:
731:
728:
726:
723:
722:
720:
718:
714:
708:
705:
703:
700:
697:
694:
691:
688:
685:
682:
679:
676:
673:
670:
667:
664:
661:
658:
654:
653:Trading hours
651:
649:
646:
645:
644:
641:
640:
638:
634:
628:
625:
621:
618:
617:
616:
613:
611:
608:
606:
603:
601:
598:
596:
593:
589:
586:
584:
581:
580:
579:
576:
574:
571:
569:
568:Broker-dealer
566:
562:
559:
557:
554:
553:
552:
549:
548:
546:
542:
536:
533:
531:
528:
526:
525:Issued shares
523:
521:
518:
517:
515:
513:
512:Share capital
509:
503:
500:
498:
495:
493:
490:
488:
485:
483:
480:
479:
477:
475:
470:
464:
463:Fourth market
461:
459:
456:
454:
451:
449:
446:
445:
443:
441:
436:
432:
425:
420:
418:
413:
411:
406:
405:
402:
383:
377:
374:
361:
355:
352:
339:
332:
329:
314:
307:
305:
301:
285:
278:
271:
269:
267:
263:
251:
244:
241:
237:
236:
231:
229:
224:
219:
216:
204:
197:
195:
193:
189:
182:
180:
173:
171:
165:
163:
160:
155:
153:
149:
141:United States
140:
136:Tax treatment
135:
133:
129:
126:
122:
117:
116:stock options
112:
109:
105:
101:
93:
88:
84:
81:
77:
76:
75:
73:
68:
66:
62:
58:
56:
52:
48:
47:stock options
44:
40:
36:
32:
19:
1211:Stock market
1160:Tender offer
1080:Public float
1050:Market trend
1040:Market depth
860:Growth stock
834:Buy and hold
743:(Cap-to-GDP)
583:Floor trader
573:Market maker
556:Floor broker
544:Participants
496:
487:Golden share
482:Common stock
458:Third market
386:. Retrieved
376:
364:. Retrieved
354:
342:. Retrieved
331:
319:. Retrieved
291:. Retrieved
284:the original
253:. Retrieved
243:
235:Y Combinator
233:
226:
218:
206:. Retrieved
177:
169:
156:
144:
130:
113:
97:
69:
64:
60:
59:
34:
30:
29:
1165:Uptick rule
1145:Stock split
1125:Squeeze-out
1120:Speculation
1065:Open outcry
954:Block trade
886:Pairs trade
1195:Categories
1170:Volatility
1150:Stock swap
1070:Order book
821:strategies
747:Book value
615:Arbitrager
610:Speculator
183:References
148:income tax
51:executives
786:Fed model
781:EV/EBITDA
696:Dark pool
627:Regulator
472:Types of
438:Types of
388:19 August
366:19 August
344:19 August
321:19 August
293:19 August
255:19 August
208:19 August
174:Valuation
125:Microsoft
1115:Slippage
1075:Position
1060:Momentum
964:Dividend
643:Exchange
600:Investor
1004:Haircut
808:T-model
620:Scalper
440:markets
94:History
1025:Margin
893:(PMPT)
755:(CAPM)
605:Hedger
578:Trader
551:Broker
474:stocks
1180:Yield
1155:Trade
1090:Rally
1011:(IPO)
899:(RMH)
872:(MPT)
851:(EMH)
804:(SML)
793:(NAV)
767:(DDM)
761:(CML)
732:(APT)
725:Alpha
692:(STP)
686:(DMA)
680:(ECN)
674:(MTF)
668:(ATS)
316:(PDF)
287:(PDF)
280:(PDF)
100:Enron
39:vests
1015:Long
819:and
749:(BV)
736:Beta
390:2013
368:2013
346:2013
323:2013
295:2013
257:2013
210:2013
108:FASB
65:RSUs
70:in
1197::
303:^
265:^
225:,
191:^
423:e
416:t
409:v
392:.
370:.
348:.
325:.
297:.
259:.
238:.
230:.
212:.
63:(
20:)
Text is available under the Creative Commons Attribution-ShareAlike License. Additional terms may apply.