Restricted Stock

Instead of stock options, some companies make “restricted stock grants,” awarding stock with limits on its transferability for a set time, usually two or three years, but sometimes for the executive's tenure with the company. Some restricted stock grants have performance requirements as well, as at FleetBoston, where the stock will vest only if executives meet “aggressive financial targets.” Restricted stock becomes more appealing in a down market (or when executives think the stock is not going to increase in value) because, unlike an option, restricted stock has value unless the stock goes down to zero. Crystal is leery of restricted stock grants, arguing that they should be a signal to the market that even management does not think that....