Startup Terms Glossary
What is Restricted Stock?
Restricted stock is special, unregistered shares in a company that are not shared with the public. Instead, these types of stock are held by company executives or directors. Trading on this type of stock is regulated heavily by the Securities and Exchange Commission and is considered non-transferable. Restricted stock can also be referred to as “letter stock” or “section 1244 stock.”
Restricted Stock Examples
Examples of restricted stock:
- Example 1. Operates as a form of executive compensation
- Example 2. Always includes a vesting schedule
- Example 3. Most often used in well-established companies
- Example 4. Used to incentivize employees by giving equity in company
Here’s another web page about restricted stock.