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).
Nearby TermsRestricted account Restricted Securities Restricted stock Restricted Stock Award Restricted stock units
Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University