{"id":1676,"date":"2013-01-17T09:59:15","date_gmt":"2013-01-17T17:59:15","guid":{"rendered":"https:\/\/masonmyers.com\/?p=1676"},"modified":"2015-01-28T12:58:42","modified_gmt":"2015-01-28T20:58:42","slug":"restricted-stock-good-alternative-to-stock-options-employee-ownership-a-series","status":"publish","type":"post","link":"https:\/\/masonmyers.com\/restricted-stock-good-alternative-to-stock-options-employee-ownership-a-series\/","title":{"rendered":"Restricted Stock Good Alternative to Stock Options — Employee Ownership (a series)"},"content":{"rendered":"

Providing employees an opportunity to have ownership in your company can be a great tool to get alignment with the employees.\u00a0 Restricted stock is one other tool to reach the Holy Grail of having employees who think like owners [December 9, 2012]<\/a>.\u00a0 As I wrote before in this series, each type of \u201cincentive plan\u201d (or maybe we should call them \u201calignment plans\u201d) has different characteristics that make them better used in certain situations than in others.\u00a0 Stock options was the focus of this post <\/a>and the situations where they are the best tool.<\/p>\n

\"restricted<\/a><\/p>\n

Restricted stock is often a better tool than stock options.<\/p>\n<\/div>\n

Another option that business owners may consider is restricted stock.\u00a0 This is\u00a0stock that is sold (at a\u00a0discounted price, sometimes deeply discounted)\u00a0or granted\u00a0(taxable event) to employees along a vesting schedule that has time and performance vesting (thus the restriction).\u00a0 If the time and performance vesting is not achieved, the company can buy-back the stock at\u00a0the original\u00a0price paid by the employee.\u00a0 So, a\u00a0person who\u00a0just became CEO of the company with no prior ownership could be sold restricted stock that represents 5% of the company and 2.5% vests over 5 years and 2.5% vests if the company attains certain financial or operational results.\u00a0 Thus, restricted stock\u00a0has fewer all-or-nothing characteristics than stock options and may be better suited for more established companies where the goal is to increase value steadily, but not aim everyone toward a moon shot exit event at some point.<\/p>\n

Below is a review of how restricted stock can influence behavior if it is implemented in a company.\u00a0 Does restricted stock \u00a0. . . . .<\/h3>\n