# Restricted Stock **Restricted stock** (also known as **restricted securities**) refers to company shares that are not fully transferable from the issuing entity to the recipient until specific conditions, known as restrictions, have been met. Once these conditions are satisfied, the stock is considered "unrestricted" and becomes the full property of the award holder. ### Utilization in Compensation Restricted stock is a common instrument for employee compensation. In this context, the process of the stock becoming transferable and owned by the employee is known as **vesting**. ### Vesting Conditions The transition from restricted to transferable status typically depends on the achievement of specific milestones, which may include: * **Time-Based Vesting:** Continued employment with the issuing company for a predetermined period (often referred to as a "cliff" or "vesting schedule"). * **Performance-Based Vesting:** * Achievement of product-development milestones. * Attainment of specific financial targets (e.g., Earnings Per Share goals). * Corporate growth or revenue benchmarks. Upon the satisfaction of these requirements, the restrictions are lifted, granting the holder the legal right to sell or transfer the shares.