Restricted Stock

Restricted stock is a grant to an employee of company stock that has limitations on the employee’s rights (usually, the right to sell the stock) until the shares vest.  Specific terms, such as the vesting period and whether the employee will be paid dividends before vesting, are spelled out in an agreement between the employee and employer.  Once the shares vest, the employee usually owns the stock without limitations and can sell it at any time.  Generally, the employee forfeits restricted stock if the employee leaves the company before the restricted stock vests.