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 does a merger or acquisition mean for the target company's employees?

    Learn about the likely impacts of a mergers & acquisition deal on the target company's employees, their benefits and adjusting ... Read Answer >>
  3. Can LLCs have employees?

    Discover how limited liability corporations (LLC) can have an unlimited number of employees and the legal steps required ... Read Answer >>
Related Articles
  1. Trading

    The "True" Cost Of Stock Options

    Perhaps the real cost of employee stock options is already accounted for in the expense of buyback programs.
  2. Financial Advisor

    Beware Of Company Stock In Qualified Plans

    While this strategy does have a few advantages, it can also pose some substantial risks to employees.
  3. Managing Wealth

    Get The Most Out Of Employee Stock Options

    Many corporations encourage employees to participate in the company’s growth by offering them a piece of the pie. That means employee stock options.
  4. Managing Wealth

    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.
  5. Personal Finance

    Introduction To Phantom Stock And SARs

    Phantom stock and stock appreciation rights reward employees with compensation tied to stock performance.
  6. Managing Wealth

    Get The Most Out Of Employee Stock Options

    These plans can be lucrative for employees - if they know how to avoid unnecessary taxes.
  7. Investing

    Who's Most Likely to Get Wall Street Bonuses?

    See what areas of finance were most likely to get you a bonus last year.
  8. Investing

    Hedging With Puts And Calls

    This trading strategy can reduce your risk - but only if you use it effectively.
  9. Managing Wealth

    5 Low-Cost Perks for Small Business Employees

    Money isn’t the only way to motivate employees. Here are some savvy strategies even the smallest business can use.
  10. Personal Finance

    What You Need to Know About Your Stock Options

    Know these things and talk to a professional to get the most out of your employee stock options.
RELATED TERMS
  1. Stock Compensation

    A way corporations use stock options to reward employees. Stock ...
  2. Equity Compensation

    This is one way to attract and retain employees to a startup ...
  3. Key Employee

    An employee with a major ownership and/or decision-making role ...
  4. Employee Stock Ownership Plan - ESOP

    A qualified, defined contribution, employee benefit (ERISA) plan ...
  5. Option Pool

    Shares of stock reserved for employees of a private company. ...
  6. Highly Compensated Employee

    For employer-sponsored, tax-advantaged retirement plan purposes, ...
Hot Definitions
  1. Interest Expense

    The cost incurred by an entity for borrowed funds. Interest expense is a non-operating expense shown on the income statement. ...
  2. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  3. Pro-Rata

    Used to describe a proportionate allocation. A method of assigning an amount to a fraction, according to its share of the ...
  4. Private Placement

    The sale of securities to a relatively small number of select investors as a way of raising capital.
  5. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  6. Backward Integration

    A form of vertical integration that involves the purchase of suppliers. Companies will pursue backward integration when it ...
Trading Center