A restricted stock refers to unregistered shares of ownership in a corporation that are issued to corporate affiliates, such as executives and directors. Restricted stock is nontransferable and must be traded in compliance with special Securities Exchange Commissions (SEC) regulations. It typically becomes available for sale under a graded vesting schedule that lasts several years.
Cliff vesting is the process by which employees earn the right to receive full benefits from their company’s qualified retirement plan account at a specified date, rather than becoming vested gradually over a period of time. The vesting process applies to both qualified retirement plans and pension plans offered to employees. Companies use vesting to reward employees for the years worked at a business and for helping the firm reach its financial goals.