Skip to main content

Definition of Restricted Stock Award

A restricted stock award is when a startup grants someone stock as equity compensation. The award is "restricted" usually in the sense that it has a vesting schedule and is subject to repurchase if the recipient leaves the company, and that the recipient cannot freely transfer the shares to third parties. Restricted stock awards are much less commonly used as equity compensation than are stock options, as the associated tax burden is usually undesirable.

Note that restricted stock awards are often confused with restricted stock units (RSUs), but the two are distinct.

Related Posts

  • allocating-startup-equity

    Post Categories

    • Startups

    Startup Equity: Cutting The Pie

    Embarking on your startup journey with a co-founder? Tackle one of the biggest questions head-on: how to allocate equity. Discover the art of making fair and strategic decisions that fuel your startup's growth.

  • startup-equity

    Post Categories

    • Startups

    What Type of Equity To Give Startup Employees

    You’re a Seattle startup. What you have is a great idea; what you lack is cash flow. But to build out your great idea, you need employees.