A:

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.

RELATED FAQS
  1. I've noticed executives buy a lot of stock below market value, and then they sell ...

    On October 30, 2006, a Google executive officer purchased 2,541 shares of Google at $9 per share and sold these same shares ... Read Answer >>
  2. What is a treasury stock?

    Every company has an authorized amount of stock it can issue legally. Of this amount, the total number of shares owned by ... Read Answer >>
  3. What are the SEC regulations on exercising stock options?

    Learn how the SEC and IRS regulate employee stock options, including the exercise of options and the sale of options, and ... Read Answer >>
  4. What's the difference between a capital stock and a treasury stock?

    Learn about treasury capital stock, how to calculate a company's capital and treasury stock, and the differences between ... Read Answer >>
  5. How can I purchase stocks directly from a company?

    There are a few circumstances in which a person can buy stock directly from a company. The following is meant to cover some ... Read Answer >>
  6. What is the difference between the equity market and the stock market?

    Discover the basic information about the equity, or stock, market and the two primary classifications of equities that are ... Read Answer >>
Related Articles
  1. Trading

    The Benefits And Value Of Stock Options

    The pros and cons of corporate stock options have been debated since the incentive was created. Learn more about stock option basics and the cost of stock options.
  2. Retirement

    Starbucks Stock Swap: Happy Baristas Means Happy Investors

    Starbucks let their employees swap their stock for a lower strike price, a good sign for value investors.
  3. Financial Advisor

    Life Insurance Plans to Help Your Small Business Retain Employees

    How to use and design cash value life insurance plans as an incentive to help attract and retain key employees.
  4. Trading

    Should Employees Be Compensated With Stock Options?

    Learn the good, the bad and the ugly sides of this type of payout.
  5. Trading

    Hedging With Puts And Calls

    This trading strategy can reduce your risk - but only if you use it effectively.
  6. Entrepreneurship & Small Business

    Raises or Bonuses Better for Small Business Staff?

    Weigh the pros and cons of each and strike the right balance to retain a top-tier staff and a healthy bottom line for your business.
  7. Investing

    What is Treasury Stock?

    Treasury stock is a company’s own stock that it holds in its treasury for later use.
  8. Professionals

    3 Reasons Businesses Give Bonuses to Poor Performers

    Learn more how bonuses paid to poorly-performing employees affect a company and why many businesses are still paying out financial rewards to such workers.
  9. Financial Advisor

    Company Stock in 401(k)s: The Risks and Rewards

    Holding company stock in a 401(k) has its risks. Here's how advisors can help clients avoid them.
  10. Investing

    What's Your Employee Value?

    Have you ever wondered how much you're worth to your boss? Here's a method for calculating that value.
RELATED TERMS
  1. Stock Compensation

    A way corporations use stock options to reward employees. Stock ...
  2. Employee Stock Option - ESO

    A stock option granted to specified employees of a company. ESOs ...
  3. Equity Compensation

    This is one way to attract and retain employees to a startup ...
  4. Employee Stock Ownership Plan - ESOP

    A qualified, defined contribution, employee benefit (ERISA) plan ...
  5. Key Employee

    An employee with a major ownership and/or decision-making role ...
  6. Option Pool

    Shares of stock reserved for employees of a private company. ...
Hot Definitions
  1. Glass-Steagall Act

    An act the U.S. Congress passed in 1933 as the Banking Act, which prohibited commercial banks from participating in the investment ...
  2. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  3. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  4. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  5. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  6. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
Trading Center