Restricted stock represents any equity that is conditionally given or sold to an insider as compensation or as part of an employee stock option plan. Generally, this type of stock restricts the investor from selling the shares in the short run to make a quick profit. Furthermore, the investor may be required to stay with the company for a certain amount of time before he or she will be allowed to trade the security. In theory, this type of stock only benefits an employee if he or she does a good job of working with the company for the long run. Because the employee can only gain the full benefits of owning this stock by staying with the company for a number of years, it is in the employee's best interest to show good work performance in order to increase the value of the company. If all goes well, after a couple of years the employee will own a valuable stock, which can then be sold for a profit. (For more on this, see Option Compensation - Part One and The "True" Cost Of Stock Options.)

Company treasury stock refers to shares that have been repurchased by their issuer. The main intent of company treasury stock is to lower the number of outstanding shares. When a company repurchases stock, it benefits investors by causing an overall increase in share price. This type of stock can either be canceled or held by the company to later be resold on the market or used to fund stock option plans. (For more info, read A Breakdown Of Stock Buybacks.)

Stock appreciation rights are rights that a company gives to particular employees that allow them to receive bonuses based on the appreciation of the company's stock over a specific time period. These rights benefit employees in the same way that owning a call option would; the more the share price increases over the time period, the greater the bonus the employee will receive.

  1. Can LLCs have employees?

    A limited liability corporation (LLC) can have an unlimited number of employees. An employee is defined as any individual ... Read Full Answer >>
  2. Do flexible spending accounts (FSA) funds roll over?

    An individual can utilize an employer’s cafeteria plan of employee benefits to establish a flexible spending account (FSA). ... Read Full Answer >>
  3. How do mutual fund managers make money?

    Mutual fund managers get base salaries, which vary greatly depending on the size and pedigree of the fund company. They may ... Read Full Answer >>
  4. How do hedge funds use equity options?

    With the growth in the size and number of hedge funds over the past decade, the interest in how these funds go about generating ... Read Full Answer >>
  5. Can mutual funds invest in options and futures?

    Mutual funds invest in not only stocks and fixed-income securities but also options and futures. There exists a separate ... Read Full Answer >>
  6. How does a forward contract differ from a call option?

    Forward contracts and call options are different financial instruments that allow two parties to purchase or sell assets ... Read Full Answer >>
Related Articles
  1. Entrepreneurship

    7 HR Basics for Small Businesses

    Whether or not you are a fan of human resources, every employer needs to know the answers to these questions.
  2. Credit & Loans

    Pre-Qualified Vs. Pre-Approved - What's The Difference?

    These terms may sound the same, but they mean very different things for homebuyers.
  3. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  4. Insurance

    Cashing in Your Life Insurance Policy

    Tough times call for desperate measures, but is raiding your life insurance policy even worth considering?
  5. Fundamental Analysis

    Using Decision Trees In Finance

    A decision tree provides a comprehensive framework to review the alternative scenarios and consequences a decision may lead to.
  6. Savings

    A Quick List of FSA Eligible Expenses

    The ABCs of FSAs: What you can and can't use your Flexible Spending Account funds for.
  7. Investing Basics

    What are the fiduciary responsibilities of board members?

    Find out what fiduciary duties a board of directors owes to the company and its shareholders, including the duties of care, good faith and loyalty.
  8. Entrepreneurship

    How to Start a Business While working a Full-time Job

    Do you have an idea for a business, but are struggling to find the time to launch it? Here's how you can start a business when working a full-time job.
  9. Options & Futures

    Understanding The Escrow Process

    Learn the 10 steps that lead up to closing the deal on your new home and taking possession.
  10. Options & Futures

    Terrorism's Effects on Wall Street

    Terrorist activity tends to have a negative impact on the markets, but just how much? Find out how to take cover.
  1. W-2 Form

    The W-2 form reports an employee's annual wages and the amount ...
  2. Crude Oil

    Crude oil is a naturally occurring, unrefined petroleum product ...
  3. Leg

    A leg is one component of a derivatives trading strategy, in ...
  4. Grant

    The issuance of an award, such as a stock option, to key employees ...
  5. Put-Call Parity

    A principle that defines the relationship between the price of ...
  6. Maturity

    The period of time for which a financial instrument remains outstanding. ...

You May Also Like

Hot Definitions
  1. Take A Flier

    The slang term for a decision to invest in highly speculative investments.
  2. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  3. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  4. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  5. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  6. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
Trading Center