As an option to fade – to limit the popularity of stock returns
As a publicly traded company to leave stock options as a way to reward and motivate atheir employees, the development of "restricted stocks" as an alternative to growth trend compensation options.
Unlike the option of giving employees the opportunity to buy a company, restrictive stock is directly owned from the first day. However, due to various restrictions on this type of slurry, its nature is considered to be limited.
These restrictions are usually started by determining when the ownership of the stock can be sold. The attribution period can be determined by the time period or certain goals that must be met. A typical time period may be 4 years of company employment, and then you can sell your stock. If you leave before you leave, you will lose your limited stake. Conceptually, this is different from the attribution and confiscation of qualified pension plans.
When the attribution is set by the target, the time period may be irrelevant. For example, when sales exceed $ 150 million, even if this happens, it may occur attribution.
Once you belong, you get the actual ownership of the stock. On the other hand, the vesting option does not give you ownership, but only the right to exercise the option to acquire ownership. Many employers believe that this gives restrictions on stocks on the brink of motivating their efforts toward the company's goals.
Also, please consider these options can be out of date and become worthless. The company's share price decline may make the exercise of the options unprofitable. Restricted stock always has the intrinsic value of the market price. Even if the price falls, you can limit the cash to the stock. If the stock is traded at $ 20 per share, the exercise price of $ 25 is of no value. Your restricted stock is still worth $ 20, regardless of the price it is awarded.
Many companies began to replace their options with restrictive stock awards. If you have received an option in the past, restrictive stock may be part of your future.
It is also noted that the tax treatment of restricted stocks is a bit complicated. Therefore, it is recommended that you consult a qualified tax advisor when obtaining any restricted stock.