Restricted Stock Award

Restricted Stock Award: A Restricted Stock Award (RSA) is a grant of company Shares that are given to an employee or executive but come with specific restrictions. These restrictions typically include a vesting period during which the recipient cannot sell or transfer the Shares. Once the vesting period is completed, the Shares are fully owned by the recipient, who can then sell or transfer them without restriction.

Examples:

• An employee is granted 1,000 Shares of restricted Stock that vest over four years, with 25% vesting each year. After four years, the employee fully owns all Shares.
• A company grants an executive 5,000 Shares that vest based on performance metrics. If the executive meets the targets within two years, the Shares will be reLeased to them.

Cases:

• In a startup, founders may receive RSAs that vest over a period of four years to ensure their long-term commitment to the company.
• A tech company offers RSAs to its employees as part of a retention strategy, with the Shares vesting over three years to encourage employees to stay with the company.