A class of stocks that have specific restrictions, usually imposing a vesting period on holders or limiting or excluding their voting rights and/ or dividend participation. These restrictions make shares less valuable on the open market. Restricted shares are typically granted to employees of the issuing company as a form of compensation. Restricted-share plans transfer shares to employees on the condition that the shares cannot be sold, transferred, or pledged until vesting comes into effect. In this sense, restricted shares are similar to share options in that both are subject to forfeiture if the vesting condition is not met.
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