Restricted stock
Also called restricted stock award, RSA.
Shares granted now but subject to forfeiture until they vest. Unlike RSUs, restricted stock is typically outstanding stock from the grant date, still reported in SCT Stock Awards at grant-date fair value.
What it is
Restricted stock is an actual share issued at grant, subject to forfeiture until it vests. The executive may have voting rights and dividends during the restriction period, unlike a typical RSU. Economically it is still a full-value award: if the stock is $100, one restricted share is worth about $100 at grant.
In the SCT it is grouped with RSUs and PSUs in Stock Awards at grant-date fair value. CompensationBase does not split restricted stock from RSUs in displayed columns.
Why companies use it
Some issuers prefer real shares so executives are holders of record immediately. Dividends during the restriction period can be part of the design.
Older plans were written for restricted stock before RSUs became standard; a few still grant it.
Pros
- Immediate share ownership, subject to forfeiture.
- Dividends and votes can increase alignment.
- Same grant-date SCT treatment as other full-value awards.
Cons
- Tax timing can be worse than RSUs if an 83(b) election is mishandled—or advantageous if it is used well; either way it is more complex.
- Issued shares count in basic share count earlier than RSUs.
- For readers of CompensationBase, it is indistinguishable from RSUs in the dollar column.
Examples
Grant of restricted shares
20,000 restricted shares at $150 are about $3 million in Stock Awards. Dividends paid during vesting may show up in All Other Compensation or as additional shares, depending on the plan.
RSU vs restricted stock
Both can vest on the same calendar. The legal difference is issuance timing. The SCT difference is usually only in the footnote’s instrument name.
On CompensationBase
Restricted stock is stored with other stock awards. CompensationBase does not split RSUs from restricted stock in the displayed columns.
Related terms
- Restricted stock unit
A promise to deliver shares (or cash equivalent) after vesting. RSU grant-date value is reported in SCT Stock Awards, not when the shares later vest.
- Stock awards
The grant-date fair value of stock-based awards (typically RSUs, restricted stock, and PSUs) reported in the SCT Stock Awards column.
- Vesting
The schedule on which an executive earns the right to keep equity. SCT totals use grant-date value, so a large reported year does not mean the shares have vested.