What is restricted stock option?

Restricted stock option is the right to buy the company’s stock in the future at a price, which is set at the time of the grant. The idea is that market value of the stock will grow in the future but the holder of the option will be able to purchase stock at a lower price. Usually a period during which the option can be exercised is specified. Then the holder can either buy the stock or continue holding the right to do so on a later date.

 

The grant of the option usually is not absolute. It is subject to the same restrictions as restricted stock may be. Vesting, transferability, company’s right to repurchase, manner of exercise are being the most common.

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